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Copyright 1903 




THE following study presents the results of an investiga- 
tion begun by me while a member of Professor Langhlin's 
seminar in political economy and carried on to completion 
with the benefit of his constant and generous sympathy. It 
has been my belief and hope that a presentation of the exer- 
cise of the legal-tender power by the English government, 
and an exposition of the relation between that exercise and 
the American method of treating the same power, would 
throw light upon the whole problem of legal tender and 
furnish a background against which an exhibition of the 
economic aspects of the subject would find a proper setting. 
This discussion is therefore purposely limited to the constitu- 
tional and legal, and does not at all approach the economic, 
phases of the problem. 

Besides the obligation to Professor Laughlin under which 
I lie, it is my privilege to acknowledge my indebtedness 
to Professor Harry Pratt Judson and to Professor Ernst 
Freund, of the Department of Political Science, for kindness 
in reading the manuscript ; to Dr. James Westfall Thomp- 
son, of the Department of History, for sympathetic help given 
in connection with some historical points ; and to my father, 
for aid and counsel in this, as in every other undertaking 
in which I have ever engaged. Of the authorities upon 
which my conclusions rest, careful acknowledgment is made 
in the body of the text. 



CHAPTER I. Introduction 1 

Purpose of inquiry. 
Scope of discussion. 
Definition of "legal tender," as employed in this discussion. 

CHAPTER II. Constitutional Development of England 4 

Purpose of chapter. 
i Relation of Crown to those advisory councils out of which 

Parliament was developed, to 1154k 
Period of establishment of Parliament and parliamentary 

righto, 1154-1377. 

Period of aggrandizement of Crown, 1377-1003. 
Establishment of responsible government and transfer of 
sovereignty to Parliament, 1603-1816. 

CHAPTER III. Power over the Coinage a Part of the Royal 

Prerogative - 9 

Source of the power or agent in the state by whom it was 


Unquestioned power of the Crown, 1066-1311. 
Parliamentary efforts to assume, 1311-1485. 
Confirmation of power by Parliament, 1485-1605. 
Surrender of power by the Crown with retention of ancient 

forms of exercise, 1695-1816. 
Content of power. 
Mode of exercise. 
Summary of chapter. 

CHAPTER IV. All Lawful Money a Legal Tender - 16 

Contrast between English and American manner of constitut- 
ing money a tender. 
Distinction between cash and time transactions, executed and 

executory contracts. 
Executed contracts ; cash transactions. 
Caution necessary in considering a period of such length. 
The relations between coins of the two metals in executed 

Method of enforcement. 



Transaction* with the king's officers. 
Executory contracts; time transactions. 

Transfer of interest to this class of transactions because of 
commercial development. 

Statement of the law. 

Development of the law. 

Citation of cases. 

Method of sanction. 

CHAITKB V. History of the Exercise of the English Coinage 

Power - - 27 

Plan of chapter. 

Original standard of coinage in England. 

Period prior to debasements, 1066-1272. 

Period of first debasement. Attempts to obtain good circulat- 

ing medium, 1272-1327. 
Period of second debasement Attempts to establish inter- 

national currency, 1327-77. 
Difficulties connected with the currency. 
Successful introduction of gold into currency system. 
Debasements; in 1344, 1346, and 1351. 
Reasons for debasements. 

Profits arising from coinage : nature of seigniorage. 
Efforts to meet difficulties growing out of the state of the 

coinage and the conditions of international trade. 
Period of mercantile policy, 1377-1816. 
Inauguration of policy, 1377-1509. 
Inquiry into causes of distress. 
Debasement of coinage in accordance with act of Parlia- 

ment, 1411. 

Prohibition laid on contracts in terms of gold. 
Further debasement, 1464. 
Period of extraordinary debasements and partial restora- 

tion of coins, 1509-1603. 
Chaotic character of period. 
Pint alteration under Henry VIII., 1527. 
fMlsuquent alterations. 

Debasements by Henry VIII. and Edward VI., 1543-51. 
Restoration, 1551-1660. 
Final debasement, 1601. 
RraMonii for debasements of this period. 

Period during which alterations were made in relative values 
to secure concurrent circulation, 1603-1816. 


Maladjustment of mint ratios. 
Criminal practices connected with the coins. 

Recoinage of silver, 1696. 
Reduction of value of gold coin. 
Legislation limiting the legal-tender power of silver, 


Summary of results obtained in chapters I-V. 
Answer to first question proposed : The Crown the agent of 

state by whom the power was exercised. 
Answer to second question: Both gold and silver a legal tender. 
Answer to third question : Reasons for special forms of exer- 
cise of power. 
Mistaken policy. 
Desire for revenue. 
Coincidence of formulation of law and cessation of debasement. 

CHAPTER VI. Legal Tender in the Colonies - 49 

Subject to be considered. 
Method by which control over the colonies was exercised. 

Administrative boards in England. 

Development of representative assemblies in the colonies. 

Application of acts of Parliament. 
Basis for idea that the legal-tender quality must be expressly 


Legal-tender quality bestowed upon substitutes for money. 
Commodities at specified rates made a legal tender. 
The quality bestowed on foreign coins. 
Massachusetts establishes a mint. 
Bills of credit issued and made a legal tender. 
Parliament assumes control. 

Over the New England colonies, 1751. 

Over the other colonies, 1764. 
Legal-tender quality bestowed on gold. 
Summary of chapter. 

CHAPTER VII. Legal Tender under the Continental Govern- 
ment - 66 
Conditions at beginning of Revolution. 

Continental bills of credit made a legal tender by the states. 
Bills issued by the states after the Revolution made a legal 

Adoption by Congress of a standard of value. 


CHAPTER VIII. Legal Tender in the Constitution - 74 

Debate in the convention of 1787. 
Debate in the ratifying conventions. 


CHAPTER IX. Metallic Money - 86 

Plan of succeeding chapters. 
First legislation, April 2, 1792. 
Foreign coins made a legal tender. 
Legislation of 1834 and 1 s.'57. 
Legislation of 1853. 
Legislation of 1873, 1874, 1878, 1900. 

CHAPTER X. Government Issues - ... 101 

Treasury notes, "receivable for public dues." 
1812, war. 

1837, commercial crisis. 
1857, commercial crisis. 

1860, war ; interest-bearing notes. 

1861, non-interest-bearing notes; the "demand notes." 
United States legal-tender notes. 

During the Civil War. 

Since the war. 
Judicial interpretation; "All debts, public and private." 

Obligations to states ; Lane County r. Oregon. 

Specie contracts; Branson r. Rodes. 

Question of legal tender in ordinary contracts; Hepburn v. 

Summary of chapter. 

CHAPTER XI. Bank Notes, Federal and State - 138 

Reason for including bank notes in discussion. 
The banks of the United States, 1791-1811, 1816-36. 
The national-banking system. 
State-bank notes. 

Effort* to avoid the constitutional prohibition. 
Hi*tility of those who favored federal institutions. 
Control by federal taxation. 
Receivable for public dues. 
Webater'a resolutions, 1816. 
The treasury circular, 1830. 
The independent-treasury system. 


CHAPTER XII. Conclusion 168 


APPENDIX I. Action of State Courts on Legal-Tender Notm 156 

APPENDIX II. Specie Contracts 167 
APPENDIX III. Documents Connected with the Reversal of 

the First Legal-Tender Decision - 160 
APPENDIX IV. Controversy Provoked by Proposal to Have 

Federal Bank 169 

BIBLIOGRAPHY -------- 175 

INDEX 178 


THE purpose of the present study is to obtain such under- 
standing of the origin, nature, and function of the legal- 
tender quality of money as may be gained from asking the 
three following questions and answering them as fully as may 
be with respect to English and American experience: 

What organ of the state has exercised the power of 
bestowing upon money the quality of being a legal tender? 
With respect to what forms of money or substitutes for 
money has the power been exercised? What have been the 
reasons for such exercise ? 

It has been held by some writers that the power to bestow 
this quality upon money is a power having its origin in 
tyranny, 1 and corruption 1 for its purpose. That the power is 
one subject to abuse is patent, and that it is a power which 
has been abused is one of the conspicuous facts of history; 
yet, allowing for these objections, certain questions sug- 
gest themselves: Has the power no legitimate place in a 
scheme of governmental powers? When possessed, has it 
been so exercised as to show that it should be prohibited 
altogether, or is it a power whose exercise should be care- 

i "The origin of legal tender among English-speaking people was the decree 
of an English king making it a penal offense to refuse the king's money after he had 
debased it." Mr. EDWARD ATKINSON, "The Unit of Value in All Trade," Engineer- 
ing MaffOMine, August, 1898, p. 565. 

* " Profligate governments having until a very modern period never scrupled 
fur the sake of robbing their creditors tojconfer on all other debtors a license 
to rob theirs by the shallow and impudent artifice of lowering the standard; 
that least covert of all modes of knavery, which consists in calling a shilling a 
pound that a debt of a hundred pounds may be cancelled by the payment of on* 
hundred shillings." J. S. MILL, Principle* of Political Economy. Book III. chap. 



fully guarded? Answers to such questions can be obtained 
only by reference to the facts of history, by an examination 
of the record of what has been done, what agency has been 
employed, what reasons have governed action. The investi- 
gation here undertaken has for its object this reference to 
history and this ascertainment of the agency, mode of exer- 
cise, and reasons underlying the exercise of the power to 
bestow the legal-tender quality upon the money of the realm. 

The idea of legal tender is a legal idea. It must be defined 
in legal terms. A definition which may be quoted is to the 
effect that " money is a legal tender when it may be used in 
payment of a debt." ' And it is from a plea in defense to the 
action of debt that the word " tender" comes. 2 The law of 
tender is thus a portion of the law of contract, of the private 
law controlling the relation between individuals in their pri- 
vate capacity. 

This law has, however, a close connection with the public 
law, in that the action of debt and plea of tender relate 
to the payment of money; and the authority to determine 
what was good and lawful money, which might be used in 
satisfaction of such obligation, was a sovereign power, 
belonging to that group of powers which, in the terms of 
English constitutional law, constituted the prerogative of the 
Crown. 1 

The definition of legal tender which has been quoted is, 
however, a narrow definition too narrow for the purposes 
to be served by this discussion. A debt is an obligation, 
enforceable at law, 4 growing out of an agreement between 
two or more persons, to be fulfilled at a later time; in other 
words, an obligation involving the element of time ; but to 

BoVTin, Law Dictionary, Vol. II. pp. 24, 581. 

'Oou. Inititmtet, Vol. II, p. 577. 

BM Amo, Law and dutomof the Comtitution, Vol. II, p. 2. 

America* and fngluk Encyclopedia of Law, Vol. XXV, p. 897. 


limit the discussion to money used in time transactions would 
exclude two great classes of transactions, the scrutiny of 
which, from the point of view of the medium employed in 
them, would greatly illumine the subject Reference is 
made to cash transactions between individuals, and to trans- 
actions involving the obligation of the subject or citizen to 
the government. So far as possible, then, those two classes 
of transactions will also be included in the discussion. 

In order to give the discussion the scope indicated, it 
will be necessary, then, to employ the words "legal tender" 
in an enlarged sense. Legal-tender money will therefore 
signify in the following pages such money as carries with 
its possession the right to use it in any lawful transaction, 
whether that transaction be a cash or a time transaction; 
a transaction between private individuals or between an 
individual and the government to which he is subject 


Relation of Crown to Advisory Bodies Growing Out of the Witanage- 
mot Establishment of Parliament and Parliamentary Rights, 1154- 
1377 Aggrandizement of Crown, 1377-1602/3 Establishment of 
Responsible Government and Transfer of Sovereignty to House 
of Commons, 1602/3-1816. 

INASMUCH as the scope and mode of exercise of any one 
of the powers which together make up the royal authority 
vary with the varying relation of the Crown to the con- 
flicting powers in the state, it is not amiss, in attempt- 
ing to arrive at a proper estimate of the power of the 
Crown over the coinage, to review briefly the familiar 
course of English constitutional development during the 
period chosen for consideration. The period begins with 
the Conquest, in 1066, and ends with the year 1816. 
The reason for selecting as the starting-point the date 1066, 
or the accession of the Conqueror, is obvious; the selec- 
tion of the date 1816 for the termination of the period needs 
a few words of explanation. The second question to be asked 
and answered in the inquiry relates to the forms of money on 
which the legal-tender quality was bestowed. It will appear 
that after the middle of the fourteenth century that quality 
was possessed with certain limitations by coins of both gold 
and silver, until 1774, when, by temporary legislation, the 
legal-tender quality of silver coins was limited. In 1816 this 
legislation was made permanent, and gold became the only 
unlimited legal tender. That date has seemed, then, a suit- 
able and convenient one at which to close this study. 

It will be remembered that in the period prior to the 
Conquest, the Witanagemot, or Great Council of the Nation, 
had a direct share in government. In connection with the 



king it enacted laws and levied taxes for the public service, 
made alliances, granted the public lands, appointed officers of 
church and state, and served as a supreme court of justice. 
Toward the close of the pre- Norman period many of these 
powers were in fact exercised by the king; but the right of 
the Witan to give counsel and consent in the two matters of 
legislation and extraordinary taxation was always recognized. 1 
The Conquest did not interrupt the continuity of the 
English government William claimed the throne by right of 
inheritance, not of conquest, and adopted a policy of making 
as few changes as possible through legislation. Under him 
the ancient national council occasionally met at the accus- 
tomed times and places, and perhaps retained its ancient 
name. 1 But the changes incident to an assumption of power 
by a foreign people and the harsh administration, together 
with the encouragement and systematization of feudal prac- 
tices, particularly those connected with the tenure of land, 
resulted in a government which was actually, if not legally, 
despotic; and as the feudal influences spread and the 
power of the king increased, the ancient legislative assembly 
changed insensibly into different councils, by which the king 
was advised under varying circumstances. 1 These were 
known as the Council, 1 the Great Council,* the Common 
Council,* the Curia, 7 and the Barons. The exact relation 

i TAB WELL- LAMQMKAD, Engltih Constitutional Htitory (4th ed.), pp. 37, 34, 
/Wd., p.71. 

Ibid., p. 181 ; STUBM, Select Charter* and Other Illuttrationi of EnglUh Constitu- 
tional Hatory, p. 14. 

Concilium. This consisted of prelate*, earls, and barons, selected by the kin*. 
was the supreme court of justice, and met three times a year at the great festivals 
Easter, Whitsuntide, and Christmas. BARNETT-SIIITH, History of the Engluk Par* 
liament. Vol. I, p. 46. 

Concilium magnum. This was a larger assembly of persons of rank and prop* 
ertjr assembled on extraordinary occasions. Ibid., p. 43. 

Concilium commune. This was a still more numerous body collected for more 
general purposes. 

i Curia regit. This and the Baronapium were generally oonreoed on the 
adjournment of the king's ordinary supreme court of justice, and were in fact the 
king's great court. Ibid. 


existing between these various councils is not known; but 
nnder Henry I. (1100-35) the Curia was organized for 
administrative and financial purposes, became something 
like a permanent committee consisting of the great officers 
of the king's household, and was further developed under 
Henry II. (1154-89). The chief aim of Henry II. is recog- 
nized to have been the consolidation and centralization of 
kingly power in his own hands; yet he continually called 
together the Great Council, and without its advice and con- 
sent he transacted no public matter of importance, enacted 
no law. 1 

During the earlier feudal period taxation assumed the 
form of a personal gift to relieve the king's wants. Under 
Henry II. all classes of society were brought under con- 
tribution, and the result of the nationalization of taxation was 
a nationalization of the protest against taxation of all with- 
out the consent of all, a protest based on the maxim of the 
Civil Code, "what touches all should be approved by all." 
This protest resulted again in the addition, under Edward I., 
of the representatives of the third estate to the Council, and 
after 1295 in their participation in legislation, with occasional 
interruptions, and, after the year 1341, as a separate legis- 
lative chamber. 2 During the next century and a half, and 
particularly during the long reign of Edward III. (1326-77), 
the Commons succeeded in establishing as essential principles 
of government three great rights: the necessity of consent of 
Parliament to all valid taxation ; the necessity of the concur- 
rence of both Houses of Parliament to all valid legislation ; a 

I See TAHWELL-LANOMKAD. op. cit., pp. 7, 95, 97. Note clause 12 of the Great 
Charter : Nvllum *ru*u0ium vel auxilium ponatvr in regno nostro niti per commune 
ibitm regni nottri, etc. STDBBS, op. cit., p. 299. 

BABKETT-SMITII, Of. C., Vol. I, p. 199. 

' H II.HM. Oonttitutional BUtory of England from the Acceuionof Henry VII. 
tm Anl* tf Oeorpe II., Vol. I, p. 19, cites statute of 1322 as the basis for this right j 
, Hiftorv oftteEnelith People (N. Y., 1881), Vol. I, p. 414. 


the right of the Commons to inquire into and amend the 
abases of administration. 1 

This period coincides with that daring which a money 
economy, as contrasted with the mediteval system of barter, 
was established, as the division of employments which had 
existed to a considerable degree in the eleventh century 
was extended,' the great trading companies developed,' the 
lords of the manors found it more profitable and convenient 
to accept money payments in place of the ancient services, 
and the tenants gladly relieved themselves of the personal 
performance of services. This transformation was not com- 
pleted, however, before the middle of the fifteenth century. 4 

Daring the fifteenth century (1399-1485) Parliament, 
under the Lancastrian kings/ was busy in the consolidation 
and regulation of the results of former contests with the 
Crown, rather than in acquiring new fundamental rights. 
The old rights it continued to exercise with slight opposition, 
voting taxes, appropriating supplies conditioned on redress 
of grievances, sharing in legislation, etc. ; and during this 
period the internal constitution of Parliament, its chief 
forms of procedure and essential privileges, were estab- 
lished.* Then came the political reaction of the sixteenth 
century. 7 Men then turned their thoughts to commerce, learn- 
ing, religion, and left to princes the powers of the state. 
There were peculiar reasons for the existence of this condi- 
tion in England besides those prevailing universally. They 

i STCBM, op. eft., pp. 49, 50. 

* CCXMINOHAM, The Growth of Englifh Induttry and Commerce During the Early 
and Middle Age* (3d ed.), p. 12*. 

Ibid., p. 342. 

TASWU,L-LANaMKAD, Of. eft., p. 313 I CUNNINGHAM, op. fit., pp. 241 ff. ; POL- 
LOCK AND M AITLAND, Hittory of the English Late be/on the Time of Edward /., 
Vol. II, p. ISO. 

Henry IV. (1389-1412); Henry V. (1412-22); Henry VI. (1422-60); Edward IT. 
<14*>-3) ; Edward V. (1483) ; Richard III. (1483-tt). 

TABWKLL-LANOXEAD, op. eft., pp. 323-34. 



were to be found in the destruction during the Wars of the 
Roses of the old nobility who had led the struggle for 
liberty, and the lack on the part of the Commons of that 
sense of importance and self-reliance which was developed 
adequately only under the successors of Elizabeth. 1 During 
this century the power of the Crown increased to dangerous 
proportions, but it was generally exercised with scrupulous 
regard for constitutional and judicial forms ; 3 and, in spite of 
the fact that arbitrary practices prevailed and the spirit of 
the constitution was often violated, the constitution remained, 
in theory, at least, always intact. 8 

The death of Elizabeth ushered in the doctrine of the 
divine right and absolute power of kings promulgated by 
James and openly espoused by the church, the court, and the 
judicial bench as a true principle of religion and policy.* 
But during the period just closed, amidst the political 
inertia of the people, a real transfer of power had taken 
place. With the growth in commercial wealth of the 
middle classes feudalism had died out ; and the Commons, 
as the representatives of the class now ready to become 
dominant, were prepared to rescue their ancient liberties and 
carry on the struggle which was to result in the execution of 
one king, the deposition of a second, and the installation of 
a third on terms of agreement constituting a veritable com- 
pact with the people. Of the conflict of the seventeenth 
century and its result it is unnecessary to speak. The 
Commons won the victory for political supremacy, and the 
Crown became only the executive branch of a government 
conducted through ministers and according to statutes. 5 

'TAHWKLL-LANOMEAD, op. cit., p. 380. 

For axample. Henry VIII. obtained an act giving his proclamation the force of 
law. " that the king tkould not be driven to extend hit royal tupremacy."Sl Henry 
VUI., cbap. 8, cited by H ALLAH, op. cit.. Vol. I, p. 49. 

>TA*WELL-LANOMKAD, op. cit., p. 503. * li>i<i., p. 510. 

* MOKDOCE. Parliamentary Reform, p. 21. 



Source of the Power Unquestioned in the Crown, 1066-1311 Parlia- 
ment Attempts to Assume, 1311-1485 Parliament Confirms the 
Power of the Crown, 1485-1696 Surrender by the Crown, Ancient 
Forms being Retained, 1685-1816. 

THE power over the coinage was from pre-Norman times 
a part of the royal prerogative. 1 It was such a power as 
that over the public peace. 1 Thus, when Henry II. came to 
the throne after the anarchical reign of Stephen (1154), his 
programme for the restoration of order included the main- 
tenance of the general security, the strengthening of com- 
merce, and the striking of a uniform coinage.' 

To so unlimited an extent had the right been secured by 
the feudal princes on the continent that the Norman lords had 
imposed upon their people a triennial contribution under the 
name of le fouage in consideration of renouncing their right 
to change, that is, to call in and recoin for the sake of profit, 
the money of the land; 4 and an effort (which was, however, 
unsuccessful) was made by the Conqueror, or by his son, to 
introduce into England a similar tax, under the name of 
moneyage.* The attempt exhibits the conception of the 
royal power held by the early Norman monarchs. 

Of course the power did not remain in the hands of the 
Crown without efforts on the part of Parliament to assume or 

I For the Roman theory concerning this power, see MOMMSSX, History of Borne, 
Vol. I, p. ITS. 

* STURM, Constitutional History of England in it Origin and 
(5th ed.), VoL I, p. 881. 

Ibid., p. 861. 

AAHLBY, Introduction to English Economic History and Theory, p. 108. 
LlVUPOOU Coins of the Realm, p. 12L 



at least to limit it For example, about 1311, during the 
regency of the Lords Ordainers, such an attempt was made. 
The Barons ' then enacted an ordinance to which the tem- 
porary governors of the kingdom 2 gave their consent, to the 
effect that no change should be made in the money of the 
realm without the consent of the Barons in Parliament. 3 
This was, however, revoked ten years later by the king and 
the attempt failed. 

Several times during the reign of Edward III. (1326- 
77) Parliament was consulted on matters affecting the coin- 
age. A few illustrations may be given. In 1331 (5 Edward 
III.) the state of the money was brought before Parliament 
and it was agreed that the chancellor and treasurer and 
such of the king's Council as they should think proper to 
call to them, and others also of experience in mint affairs, 
should ordain whatever they might think would tend to the 
advantage of the king and his subjects. Again, in 1335 a 
statute was enacted in compliance with a petition from the 
Commons, providing that no money should be taken from 
the realm. 4 

An interesting petition of the Commons presented in 
1846 throws light on the relations then existing between the 
Crown and Parliament It contained three requests relating 
to the money of the realm. The first request related to 
penalties for exporting good money and importing bad 
money, and was partly granted by the king. The second 
asked that money should be more frequently coined and 
that the mints should be open in all the places where they 
had been accustomed to be. This also was granted. The 

I BM above, p. 5, note 7. 

The Lord* Ordainers were appointed by Parliament in 1310 to administer th 
kiofdotn, became of certain abuses of the king. GBEEN, op. cit., Vol. I, p. 384. 

RDDIMO, AnnaU of the Coinage of Britain, Vol. I, p. 400. 


third request consisted of two parta The first part, that the 
king's receivers " should take of the people in every place 
both gold and silver at the same rate at which the people 
were obliged to receive them/' was granted; but the second 
part, thnt no change in the money of gold and silver should 
be made without the consent of Parliament, was considered 
an attempt to invade the royal prerogative, and to it answer 
was made that the king and his nobles would ordain as they 
should see fit 1 

In 1351 was enacted a statute which is interpreted by 
Blackstone as throwing doubt upon the extent of the royal 
power. This statute provided that the money of gold 
and silver then current should not be impaired in weight 
or in alloy ; but " as soon as a good way might be found 
should be put in the ancient state as in the sterling/ 1 
Blackstone says : " When a given weight of gold or silver is 
of a given fineness, it is then of the true standard called 
esterling or sterling metal . . . . ; and of this esterling or 
sterling metal all the coin of the kingdom must be made, 
by the statute of 25 Edward III., chap. 13. So that the 
king's prerogative seemeth not to extend to the debasing or 
enhancing below or above the sterling value." * 

The commentator puts upon the prerogative a construc- 
tion, based upon the statute cited, which suggests the legal- 
tender controversy in the United States, and tries to confine 
that power legally within the limits which public morality 
would dictate ; and he was fortunate in finding a statute the 
text of which sustained his view. But his interpretation 
cannot be accepted. The saving clause "as soon as a good 
way might be found " left the whole matter in the discretion 
of the executive, as is proven by the fact that two years 
later the Commons again petitioned that the esterling 

I Ibid,, p. 490. 

* BLACEHTOXK, Commentariet on tAe Law of England, Vol. I. chap. 7. p. ZM. 


(penny) might be restored to its ancient value, and that it 
should be provided that this should not be impaired until 
such alteration took place. 1 

The interpretation put upon the law by the great com- 
mentator is interesting even if not correct. As Sir Matthew 
Hale says of the power of the Crown to debase and enhance 
the value of coins without the consent of Parliament, fieri 
non debet, sedfactum valet* 

Parliament was too helpless during this and the following 
reign * to claim for itself the power under consideration and 
justify that claim. This is evidenced by numerous petitions 4 
concerning grievances connected with the coinage and ordi- 
nances similar to that discussed by Blackstone and similarly 

In 1414,* however, a new method of attack was employed. 
Parliament then acknowledged the prerogative within 
certain limits, but claimed the right to confirm royal acts. 
It was then enacted that the king should apply to the exist- 
ing grievances such remedy as he should think most profit- 
able for himself and his people, and his provision for the 
betterment of the money of the realm should remain in force 
until the next Parliament; if then approved, it should be 
established to endure forever. 8 

This claim on the part of Parliament was followed by a 

i RCDINO, op. cit.. Vol. I, p. 440. 

HALE, Pleat of the Crown, Vol. I, pp. 192-5. It is interesting to note that this argu- 
ment advanced by Blackstone had been suggested by Coke, and it was in reply to Coke 
that the argument of Sir Matthew Hale was directed. Blackstone does not, however, 
make reference to Bale's comment on Coke. It should also be said that when 
Blackstone wrote (1785) the development of commercial interests had brought in its 
train not only a growth of public morality, as the interests of government were seen 
to be identified with the interests of the wealth-producing classes, but also a clearer 
understanding of the principles which should govern the policy of the state with 
fpeet to the money of the realm. The effect of the increase and organization of 
the public debt on the attitude of government toward the money of the realm opens 
op a field for investigation and speculation which cannot be gone into here. 

Henry V. (1390-1412). 4 See below, chap. v. 

2 Henry V. t R UD i NO , op. cit., Vol. I, p. 497. 


succession of acts more or less similar, 1 and the frequent 
petitions of the Commons were more heeded; 1 bat in the 
reactionary period of the reign of Henry VII. 1 all that may 
have been gained was abandoned, when it was declared by 
Parliament that all coins issuing from the royal mints and 
bearing the royal stamp should be accepted of all within the 
realm at the rate at which they were issued. 4 By this act the 
royal power over the coinage was fully admitted and con- 
firmed. Nor did any change take place either in law or in 
practice during the two following centuries, during which 
occurred the excesses of Henry VIII.* and the variable policy 
of Elizabeth* in connection with the coin of the realm. Even 
during the contest of the Commons with the first Charles, 
although control over the coinage was actually assumed by 
the Commons, the state of the law was evidenced by the fact 
that no coin was issued during the lifetime of the king with- 
out the royal superscription and image. 7 Only after that 
body had been established as the sole ruling power was 
money appointed to be coined with the style and by the 
authority of the Commons." 

Such were the relations of the Crown to Parliament until 
the revolution of 1688. As evidence of the change which 
was then produced may be cited the speech from the throne 
in 1095, when William of Orange, finding himself beset 

I Compare RCDINO, op. cit.. Vol. I, pp. 483, 489, for previous petitions. 

* Ibid., Vol. I, pp. 502, 511 ; Vol. II, pp. 8, 18. U&V1509. 

RL-DIXO. op. cit.. Vol. II, p. 59. The act is cited as 19 Henry VII.. c. ft. Be* 
also 5 and 8 Edw. VI., c. 19. RCDINO, op. cit.. Vol. II, p. 118. 

See below, p. 40. See below, p. 42. ' RCDINO. op. cit., Vol. II. p. 286. 

* It is unnecessary to point oat that an act of the Crown now is an act of the 
ministry ; that is, virtually of a majority of the House of Commons. " This was cer- 
tainly a question [to remedy the defects of the silver coinage) upon which the crown 
by its prerogative had a peculiar right to decide, but when the matter is of so much 
importance, and so directly and immediately connected with the interest* of all 
nlassfm of the community, no ministry would bit disposed to give advice to the crown 
of the proper mode of proceeding without submitting that advice to the ooasidera- 
tin of Parliament," Lord Liverpool, May 30, 1816, HAXSABO, 

Debate*, First Series, Vol. XXXIV. p. 911. 


with the problems of a foreign war and of a domestic 
situation of extreme difficulty, was glad to throw the respon- 
sibility of the great recoinage of that year upon his Parlia- 
ment. "I must likewise," said the speech from the throne, 
" take notice of a great difficulty we lie under at this time 
by reason of the ill state of the coin, the redress of which 
may perhaps prove a further charge to the nation ; but this 
is a matter of so general concern and of so great importance 
that I have thought it fit to leave it entirely to my 
Parliament." 1 

Having discussed the source of the coinage power, its 
content and the mode of exercising it should be presented. 
As to the content, the power included the determination of 
weight, alloy, and denominative value of new coin; the 
alteration* of coin already in use; and the legitimation of 
foreign coin* 

The method in which this power was exercised was by a 
royal proclamation, or by an indenture entered into between 
the king and the master of the mint, in which a clause was 
inserted declaring the value at which the coins should pass.* 
This latter method, though less formal, was as legal whenever 
it was possible to employ it, as was shown in the decision of 
the court (1702) in the case of Dixon v. Willows, 5 when it 
was said of certain gold coins whose authentication rested 
only on indenture "though there is no act of parliament or 

' King's Speech, November 26, 1695, Commons Journal, Vol. XV, p. 339. The prece- 
dent then established is still observed. The Lords and Commons considered the 
Kubject separately and adopted resolutions, which were made known in an address 
to the king and constituted the substance of a proclamation. See COBBETT, Parlia- 
mentary History, VoL V, p. 967; Vol. VII, p. 524; also HANSARD, Parliamentary 
Debate*, Vol. XXXIV, p. 946. 

<Thi> extended to taking away the currency of, that is, "crying down," coin 
in use. 

HALE, Pleat of the Crown, Vol. I, p. 188 ; RDDINQ, op. cit., Vol. I, p. 4. 
Ibid., pp. 57, 370, 458; LIVERPOOL, op. cit., p. 23. 

I38ALKELD (English Reports), 238. This method, by indenture, was obviously 
inapplicable in connection with foreign coins, or domestic coins already in circula- 


order of state for these guineas, jet being coined at the 
mint, and having the king's insignia upon them, they are 
lawful money at the value they were entered at the mint." 

Summing up the results of the foregoing pages, it may 
be said that the legitimacy of currency, or lawfulness of 
English money and its denomination or value, rested upon 
an act of the Crown which assumed the form of a proclama- 
tion or indenture between the king and the master of the 
mini If it can be shown that the legal-tender quality 
inhered in all lawful money, it would follow that in the ac,ts of 
the Crown regulating the money could be traced the legal- 
tender policy of the English government In the following 
chapter an attempt will be made to show that such was the 



English and American Forms of Legislation Contrasted Distinction 
Between Cash and Time Transactions Cash Transactions 
Transactions with King's Officers Time Transactions. 

BY the constitution of the United States two distinct 
prohibitions are laid upon the states: " No state shall coin 
money ; . . . . make anything but gold and silver coin a 
legal tender in payment of debts." 1 By the act of April 2, 
1792,* establishing a mint and regulating the coin of the 
United States, it was expressly provided 3 that "all gold and 
silver coins which shall have been struck at and issued from 
said mint shall be a lawful tender in all payments whatso- 
ever." That is, under our American legislation, the legal- 
tender quality is a power expressly conferred upon certain 
forms of money, while withheld from other forms, or 
perhaps conferred to a limited extent upon others. Such 
express bestowal of this power was not, however, essential 
under the English law, but the quality of being a " tender 
in payment of debts" inhered in all lawful money. " Cur- 
rency," being " current coin," meant coin or money which 
was full legal tender unless the contrary was expressed. If 
the coin was not to be an unlimited legal tender, current in 
respect to all transactions, whatever the amount involved, 
and to all persons, the limitation was clearly stated. 

Money transactions readily divide themselves into such 
as are begun and completed at one and the same time, in 
which, as in bargain and sale, money passes for goods ; and 
in which a period of time elapses between the date on 

> Constitution of the United States, 1, 10, 1. 

United State* Statute* at Large, Vol. I, p. 246. a ibid., Sec. 16. 



which an agreement is made and that on which that agree- 
ment is fulfilled. For these two classes the familiar terms 
"executed" and "executory" contracts may be accepted. 

In considering this class of contracts it should be borne 
in mind that in the early portion of the period under con- 
sideration freedom of contract and of commerce did not 
exist in England in the sense in which we understand 
these terms. Government monopolized 1 the function of 
coinage and enforced its monopoly by imposing penalties for 
the offense of refusing the king's coins at the values set upon 
them by the king, and by prohibiting the currency of coins 
whose circulation would interfere with the coins issued from 
the king's mints.* This legislation had its counterpart, of 
course, in other legislation regulating prices, 1 so that as the 
value of the coin went down the price charged for goods 
might, if possible, be kept from going up. 

It should also be borne in mind that in discussing so 
long a period as the one under consideration words 
employed may have different signification where applied to 
different divisions of the period. For example, at the time 
of the Conquest, and for a considerable period thereafter, 4 
payments were often made by weight instead of by tale. 
The extent of this practice cannot be stated; but such a 
practice would obviously have an effect on legislation pro- 
claiming certain money current at stated rates. 

1 A.HH LET, op. Cif ., p. 175. 

J For example, by the Statute of the Staple, in 1333 (27 Edward III.), it was pro- 
Tided that if any person wished to receire good money of gold or silrer in payment, 
other than the king's money, he should be allowed to do so : bat no one should be 
compelled to take such money against his will. This was repeated in 1987 (41 
Edward HI.) because of light foreign money which has been imported. BCDIXO. 
op. cit.. Vol. I, p. 440. 

See p. 40, for illustration. 

* For discussion of extent and duration of this practice, see CcmmOHA. 
Orotrth of KnglnH Indiwtry and Commerce Ihtrinp the forty and MtddU Agm, p. 330. 
note 5. See also MADOX, HMory of the Exchequer, Vol. I, chap, ix, for forms of pay- 
ment to treasury in early times. 


In ascertaining the relations which existed between coins 
of the two metals in executed contracts, the history of the 
first issue of gold coins will prove instructive. When, in 
1257, Henry III. tried to introduce, gold into the English 
currency, he issued pennies of fine gold, each weighing as 
much as two silver pennies, -j-J T of a tower pound, and 
ordered that each of them should pass at the value of twenty 
silver pennies. "A writ issued commanding the mayor of 
London to proclaim in that city that the gold money which 
the king had caused to be made should be immediately 1 
current there and elsewhere within the realm of England in 
all transactions of buying and selling at the rate of twenty 
pennies of sterlings for every gold penny; and that the 
king's money of silver should be current as it had been 
before." 3 Here is an illustration of an early exercise of 
the legal-tender power. The issue of gold pennies 3 was 
unfavorably received, and protest was made by the citizens 
of London, whereupon a second proclamation issued 4 
declaring that no one should be obliged to receive the gold 
coins; and those who had taken them might bring them to 
the royal exchange and there receive the value for which 
they had been made current. 5 

Again, in the early time, 6 the penny was the only silver 
coin struck, and it was provided that, "on account of the 
poor, whenever necessity required the penny might be 
divided into half-pennies and farthings." On complaint 
that the fractional pieces resulting from this crude device 
were rejected, it was proclaimed sometime during the cen- 
tury following the experiment with the gold pennies 7 that 

August 1, 1257. 2 RUDING, op. cit., Vol. I, p. 358. 

LIVERPOOL, op. cit., p. 46. < November 16. 

These pennies seem never to have gained popularity. LIVERPOOL, op. cit., p. 46. 

Edward I. coined groats, 4 pennies, but they did not become generally cur- 
rant until the reign of Edward 111. Ibid., p. 31. 

* Prior to 1338, when provisions were made for the coinage of half-pennies and 
farthings.-BcDiMO, op. cit.. Vol. I, pp. 402, 406. 


whoever, whether in buying or selling, should refuse any 
half-penny or farthing of lawful metal and proper form, 
should be seized as a contemner of the king's majesty, be 
thrown into prison, and suffer the punishment of the pillory. 

In 1843 a second effort was made to introduce gold into 
the coinage system. Edward III. then coined the noble 1 
and ordered it to be current at a certain value. Finding 
that this valuation was incorrect, and that the coins were 
overvalued, it was subsequently proclaimed* that no one 
should be forced to take them against his will. In the same 
year another set of coins was issued to be current at a dif- 
ferent value, but it was ordered that they need not be taken 
in payments of less than twenty shillings. 3 Soon afterward, 
possibly because they had become popular, possibly to 
accustom the people to their use, it' was ordered that these 
coins should not be refused in any payment whatever. 4 

From these illustrations, taken from the earlier portion of 
the period, it may be concluded that in cash transactions the 
money of gold and silver which was issued from the king's 
mint as lawful money, or to be current throughout the realm, 
was good in all cash payments, unless limitations or excep- 
tions were expressly made known ; that is to say, of differ- 
ent forms of money current at any time the buyer had the 
right to select the form to be used. Coming to a more 
recent date, the same fact may be established. In 1662, for 
example, a certain base money had been issued for use in 
Ireland, and was ordered to be current in England also, 
except that no one should be compelled to take more than two 
in every twenty shillings of the baser kind. 4 

I See p. 33. These coins were issued January 27, 1849. The noble, A of I 
of fold. 1M floe, was declared current at 6s., a ratio of 12 if 111 to l.-LlTBEPOOC, op. 
cil., p. 49. 

t July 9, 1844.-KBNTON, Odd Coin* of England, p. 1ft. /MtL, p. It, 

See below, p. 33; II ALB, op. ett. Vol. I, p. 198. 

RCDINO, op. cit, Vol. II, p. 839. Similarly, when the minor copper coin*** was 
introduced (1672), the limitation upon its currency was expressed. /Wd., p. 844. 


An apparent exception to this rule is found by Lord Liv- 
erpool 1 in the fact that in 1663 the mint indenture providing 
for the issue of guineas declared that twenty shillings should 
be the legal value of the coin, while the authorities made no 
effort to enforce this rate when the coin became generally 
current at from twenty-one to twenty-two shillings. Color 
is lent to this view by the fact that the attorney -general was 
directed by an order in council to issue a proclamation 
declaring the coins current at the rate of the mint indenture, 
and no such proclamation was ever issued ; while in 1717, 
when the guinea was declared to be a twenty-one shilling 
piece, such a proclamation issued, and every indication was 
given of intention to enforce it. 2 But the case of Dixson 
v. Willows, 8 already cited, shows this to be no more than a 
seeming exception, if an exception at all. 

The method of enforcing the provisions here discussed 
becomes of interest. It was the method of imposing a pen- 
alty of greater or less severity for their violation; that is 
to say, the police power of the state was invoked in their 

The question arises as to whether or not the Crown was 
bound by the rates indicated in the proclamation and inden- 
tures, and whether they applied to all royal revenues. It 
may be said at least that in those instruments no exception* 
is made with regard to the royal revenues ; and yet there 
are acts of the Crown, or petitions in Parliament, which 
indicate that in these matters as in others the poor and lowly 
in position were imposed upon, not only by the king's 
officers, but by the great lords or their receivers. For 

Op. cit., p. 76. 2 Ibid., p. 95. 

*Or Dixson v. Willoughs, 3 SALKELD (English Reports), 238. 

* An interesting exception to this fact may be cited : In 1689, when James II. was 

\ '" . ..: '.' ; : i 1 '-. I," ; . 'I in I n 'Liii. 1 " l>r:i- - IIH>IM-Y " (.-ix-primy jiicrcs of l> 

ainl copper), declaring by his proclamation that they should be current in all pay- 
menU, except the duties of customs and excise on importation of foreign goods, 
money left in trust, etc. RCDINO, op. cit., Vol. II, p. 363. 


example, in 1343 the Commons petitioned that the sheriffs 
and other officers of the king should receive for debts due 
him half-pennies as well as sterlings, and that all the great 
men and others of the realm should receive half -pennies lor 
the debts, rents, and services due them, and that the half- 
penny should be of the same weight as the sterling (propor- 
tionately) and of as good silver, or be wholly put down; 1 but 
they received only an evasive answer to their prayer.' And 
in 1504 it was declared by proclamation that, " pence being 
silver and having the king's print, should be current to him 
in all his receipts and to all his receivers, and to all other 
lords, spiritual and temporal, and their receivers, and to all 
others within the realm." ' 

And from a proclamation issued by Henry VIII. at the 
time of his first debasement of the coinage (1526), wherein 
the dates at which the new values are to apply to antecedent 
obligations are carefully fixed, 4 it may be inferred that, mak- 
ing allowances for the influences referred to, 5 the same 
values prevailed in payments to the king's officers as in 
those to other individuals. 

The commercial and industrial development of the six- 
teenth and seventeenth centuries, necessitating, as it did, 
freedom from governmental interference,' and transferring 
the emphasis to time transactions, as commercial life grew 
more complex and industrial processes involved more and 
more the time element, renders the class of cash transac- 
tions and regulations regarding the money to be used in 

I Ibid., Vol. I. p. 417. 

* Indeed, a similar petition was offered three years later (ISM), and teems to 
hare been granted. Ibid., p. 431. 

* See Ibid., Vol. II, p. 59, for a similar provision. Ibid., Vol. II. p. 7S. 

See Statutes 7 and 8 William III., chap. 1; 8 William III., chap. 2; 8 and 
9 William III., chap. 6 cited by LIVERPOOL, op. at., p. 83, for evidence of ezpreM 
permission to receive the clipped and defective coin prior to and during the great 

It was in 1551 that Qresham protested ajrainst the restrictions on exchancwof 
different forms of money as injurious to En*lih trade. Bcoixo, op. cit,, VoL 1 1. p. K2. 


them interesting chiefly from the historical and theoretical 
point of view. Interest now centers in transactions involv- 
ing time, and, as was said before, 1 the more general use of the 
words "legal tender" is in connection with this limited class 
of operations. 

Turning, then, to time transactions, to executory con- 
tracts, of them, too, it may be said that in the English 
law all " lawful money," all money issued from the mints as 
current money, was a legal tender in satisfaction of debts, 2 
unless the contrary was expressed or limitations were 

It was the doctrine of the middle ages that for every 
commodity or service there was a just money equivalent. 3 
This had been the dictum of the Roman law. "However 
diversified may be the object of an obligation, it is always 
transferable, in the eyes of the law, into the payment of a 
certain sum of money." * Though the English law of con- 
tract was not fully developed before the time of Henry VIII., 
the action of debt which lay to recover a sum of money was 
one of the early actions developed, being in use at least as 
early as the time of Henry I., and it is from the pleas allowed 
in defense of such action that we have the word "tender." 
The debtor could of course discharge his obligation by pay- 
ment of the sum claimed ; but sometimes, when there was 
dissatisfaction on the part of the creditor, he could acquit 
himself by tender to the creditor of the amount admitted by 
him as due. Should the creditor refuse the sum tendered, 
the debtor could then deposit it with the court, leaving with 
the court the question of the adequacy of the tender. 

i Chap. I . i>. 2. 

* "A debt U an obligation arising oat of contract express or implied, as of a 
landing, or borrowing, or letting out, or some other just cause inducing a contract." 
GLANVXL (Beames's Translation), book X, chap. 3. 

* ABB LEY, op. cit., p. 163. 

POTTE, Institute* of Gaiui (ed. S), pp. 840, 341. 


The doctrine of the law aa finally developed was that for 
every wrong involved in breach of contract there was, as in 
case of goods and services, a money equivalent, a money 
compensation. Only in so far as, by the payment of money 
damage, the parties could be put into the position in which 
they would have been had there been no breach, did the 
common law attempt to give relief. 1 

In deciding the question whether, when an alteration 
had been made in the money of the realm, a contract made 
before the alteration should be satisfied in the coin current 
at the time of making the agreement or in that current at the 
maturity of the obligation, the courts might have adopted 
either of two possible theories: 

On the one hand, it might have been said that the logic 
of the doctrine that there was always a money equivalent 
for any breach of contract involved the requirement that in 
actions for the payment of money such money should be 
required of the debtor as was a fair equivalent for what he 
had agreed to pay. This would not have involved the 
decision that there could have been no alteration in the 
relative value of money to commodities, which would have 
been obviously impossible ; but it would have necessitated 
the decision that such changes as had resulted from an arbi- 
trary exercise of power should not apply to pre-existing 

On the other hand, it might be held that the supreme 
authority which lends its force to bring about the satis- 
faction of the obligation may determine wholly the condi- 
tions on which that force will be exerted; that is, the 
state may say to the creditor that his claim will be enforced 
if he will submit to conditions imposed. Such a conclusion 
is to a certain extent inevitable. Conditions of time, of 

I Herein lay dne of the deficiencies of the common law, leading to the develop- 
ment of the court of chancery, which care remedy, not by money damage, bat by 
requiring specific performance of the agreement. 


place, of form, etc., must be prescribed in order to insure 
the final settlement of controversies, to prevent the debtor 
from being harassed, etc. But when the state prescribes 
conditions which require of the creditor that he sacrifice 
what is morally and justly due him in order to obtain the 
advantage of the administration of justice, those conditions 
partake of the nature of a selling of justice. And against 
this the Crown was pledged by the provision in Magna 
Charta, " to none will we sell, deny, or defer justice." : 

This position, however, was practically that taken by the 
courts. The Crown was the fountain and source of justice, 
and could prescribe the terms on which that justice would be 
administered. This doctrine was based fully and frankly on 
the theory of the royal prerogative. Owing, perhaps, to 
the amount of governmental regulation and the lack of 
general freedom of intercourse, there seems to be no ques- 
tion as to the royal power in this respect prior to the reign 
of Edward VI. In 1552-53, at the Hilary term of the year 
6 and 7 Edward VI., we have the case of Poug v. DeLind- 
say 1 , as follows: "In debt on bond in payment of <24 ster- 
ling, plea of tender that at the time of payment of said sum of 
money certain money was current in England in the place 
of sterlings, called Pollards, held, that if at the time appointed 
for payment a base money is current in lieu of sterling, ten- 
der at the time and place of that base money is good and tke 
creditor can recover no other." 

And in 1601, the forty-third year of Elizabeth's reign, 
the same question came up in the great legal-tender case 
known as Brett's Case, the " Case of Mixt Monies: " 

"April, 43 Eliz. Brett bought wares of one Gilbert a 
merchant in London, and became bound to him in 200 

I "ffulU rcndcmut, nulli negabimu*, nulli differemiu rectum ant juetitiam." 
Magna Charta, chap. 40; BTCBBS, Select Charters, etc., p. 301. 

* Dr* (English Reports), 82A. This case is cited in the dissenting opinion in 
Qribwold v. Hepburn, 2 DDVAL (Kjr.), 71. 


conditioned for the payment of one hundred pound Sterling 
current and lawful money of England in September fol- 
lowing at Dublin in Ireland: 24th May, 43 Eliz. the queen 
sent to Ireland certain mixt money from the tower of Lon- 
don with the usual stamp and inscription, and declared by her 
proclamation, that it should bo lawful and current money of 
Ireland, r/:. a shilling for a shilling, and sixpence for six- 
pence, and that accordingly it should pass in payment, and 
none to refuse, and declared that from the 10th of .////// next 
all other money should be decried and esteemed only as bul- 
lion and not current money. Upon the day of payment 
Brett tendered the 100 in this mixt money, and resolved 
on great consideration that the tender was good, the place of 
payment being in Ireland and the day of payment happen- 
ing after the proclamation was made ; that altho this were 
not in truth Sterling, but of a baser allay, nor a money cur- 
rent in England by the proclamation, yet the payment being 
to be made in Ireland, it was, as to that purpose, current 
money of England; but if the day had been passed before 
the proclamation, then he must have answered the value as 
it was when payment was to have been made." 

The report of this case is given in full as quoted from Sir 
John Davis by Sir Matthew Hale, because it is the basis of 
the English law of tender. 1 Thus the question was squarely 
raised whether the money with which a contract should be 
fulfilled was that current at the time of making the agree- 
ment or that current at the time of payment, and the law was 
settled in favor of the latter. 

It has been said previously that the law regulating cash 
transactions was sanctioned by penal provisions. In the case 
of time transactions, such provisions are evidently unnecee- 

l Another eaM seems to hare been decided in the same way in the same year, bat 
of the decision only a quotation has been available. The substance of that is that 
every coin leiritimated by royal proclamation become* lejral tender. Wade's CAM, 
cited from 43 Eli*. 406 by Rot. ; HALE, op. oil.. Vol. I, p. IK. 


sary. The power of the courts to declare a contract satisfied 
and the debtor acquitted of all obligation, i. e., the civil 
power of the courts, is obviously adequate. In this power 
the law found its sanction. 

In cash transactions, then, the buyer had the right of 
selecting the form of money to be used. In the same way, 
in time transactions the debtor had the power of choice as to 
the form of money in which his obligation would be satisfied. 

The significance of this state of the law was that every act 
of state dealing with the lawful money of the realm, alter- 
ing it in any way, was a legal-tender act, affecting the value 
of the monetary unit to be employed by any subject in the 
payment of his debts. 



Original Standard of Coinage Attempt through Debasement to Ob- 
tain Good Circulating Medium Efforts to Secure International 
Currency Reasons for Later Debasement Chaotic Condition 
under Henry VIII. Efforts to Obtain Concurrent Circulation of 
Gold and Silver Coin. 

IF the conclusions of the preceding chapters are accepted, 
there may be obtained from a survey of the acts of the 
Crown issuing new coin, altering coin already in circulation, 
or legitimating foreign coin, a view of the legal-tender 
policy of the English government. The presentation of 
such a view will be attempted in the present chapter. 

For convenience, the long period to be discussed may be 
divided and those reigns considered together concerning 
which it is possible to make general statements. These 
divisions include, first, the reign of Henry II., Richard L, 
John, Henry III., covering the years from 1154 to 1272; 
second, the reigns of Edward I. and Edward II. (1272- 
1326/7); third, that of Edward III. (1326/7); fourth, from 
the accession of Richard II. through the reign of Henry 
VII.; fifth, the reigns of Henry VIII., Edward VI., Mary, 
and Elizabeth (1377-1602/3); sixth, and last, from the 
reign of James I. through that of George IV. (1602/3- 

Before proceeding to this discussion, it should first be 
remarked of the original standard of coinage in England that 
at the time of the Conquest the standard unit at the English 
mint was the iower, or Saxon, pound of silver, weighing 
5,400 grains, and f J fine; that is, 11 oz. 2 dwt. of silver to 



18 dwts. alloy. This remained the unit until 1527, when 
Henry VIII. substituted the Troy pound of 5,760 grains. 1 
To the tower pound the pound in tale conformed, being 
divided into twenty shillings, which were in turn divided 
into twelve pence, or esterlings. 1 

As in many other respects, so in the coinage, the Conqueror 
left affairs as he found them, and retained the weight, stand- 
ard, and denomination of his predecessors. At first only pen- 
nies (sterlings) were coined; then fractions of a penny; and 
finally, in the time of Henry VII. (1485-1509), silver coins 
of higher denominations. Up to this time these denomina- 
tions denoted only money of account ; and payments of large 
sums were doubtless often made by weight 3 a practice 
which diminished the inconvenience arising from having 
coins of only one denomination and that a low one. 

It has been noted* that one of the reforms promised by 
Henry II. when he came to the throne (1154) was the refor- 
mation of the coinage. This was carried out by him, and 
there seems to be some evidence that he raised somewhat 
the standard of fineness. 6 At all events, from the date of his 
accession until 1299 8 no alteration for the worse took place. 

During this period there were, however, interesting occa- 
sions for the exercise of the coinage power, growing out of 
the worn state of the English coins and the importation of 
poorer money from the continent. As the uncertainties con- 

i This tower pound was probably identical with the unit of Charles the Great. 
Boo KBNTON, Gold Coins of England, p. 84; RIDGEWAY, Origin of Metallic Currency 
and Weight Standards, p. 385; CUNNINGHAM, Growth of English Industry and Com- 
merce in Mediaeval Times, p. 118. 

? The same word "sterling" or "esterling" or "aesterling," designated the 
standard fineness of the silver metal, |J fine, and the coin, the penny, made of that 
standard. Note Blackstone's use of it in passages cited, p. 12. "As in the 
esterling" meant "as in the penny of the good old times." On the continent it was 
a general term for the money of England. BODING, op. cit., Vol. I, p. 17 ; compare 
HALE, op. cit., Vol. I, p. 189. 

MADOX, History of the Exchequer, Vol. I, p. 272. 

P. 9. 6 HALE, op. cit., Vol. I, p. 190. 28 Edw. L 


nected with the value of the coin, which constituted the only 
circulating medium, caused great distress among the people, 
a general council "of all the nobles of England, bishops, 
earls, and barons," was held before the king at Oxford, in 
the year 1247. It was then proposed to look for the remedy 
in an alteration of the standard. 1 This proposition was 
rejected; but during the next year (1248) resort was had to 
a great recoinage, under the following conditions: 1 First, 
from every pound was taken thirteen pence to cover cost of 
coinage;' offices of exchange were established at which the 
new money could be obtained for the old, but they were few 
and distant the one from the other, so that persons had to 
suffer loss of time and strength in making the journey ; and 
the new money was given for the old only by weight, 
which of course meant a greatly diminished number of 
pieces. These were surely arduous terms. Matthew Paris, 
the historian of this early period, 4 says that where thirty 
shillings should have been received scarce twenty were got 
So great were the obstacles that it was found necessary to 
"cry down"* the old coins, which seems to have been rarely 
done in English history;* but the purpose seems to have 
been an honest purpose. 

Again, the effort to obtain a good circulating medium may 
be seen in the attempt of the king to introduce gold coins 
into England, to which allusion has been made. 7 The attempt 
failed, perhaps from simple conservatism on the part of the 
people, perhaps because the method employed was a poor one ;' 

I RCDIMO, op. cit.. Vol. I, p. 353. 

132 Henry IU. /bid., p. 355. 

This included a seigniorage of 7d. in the pound. 

Cited, ibid., p. 370. 

* Deprire of its currency or legal-tender quality. 

*/6id., p.355. 'P. 14. 

These coins were known as "pennies" and were \ll fine. They weighed as 
much as two silrer pennies, or 45 grains, and were to pass at twenty pennies. LOT- 
WOOL, op. cit., p. 45. 


but ruler and people were alike honestly seeking remedies for 
the distressing condition of the money of the realm. 

In the year 1299 Edward I. caused the first reduction in 
the legal weight of the penny to be made. He then had 
the pound weight divided into 20s. 3d., 1 and thus reduced 
the penny by 1 ^-f- per cent. There seems to have been no 
other reason for this than the desire to adapt the legal value 
of the coin to the worn condition of those already in use. 2 
The king was but adopting the suggestion made by the 
council of nobles a half century before. 3 

During the reign of Edward I. (1272-1307) and his suc- 
cessor,* efforts were chiefly directed toward preventing the 
importation of "weak " foreign money, of which there was an 
increasing quantity as intercourse with the continent became 
freer. Thus, in 1292, there was enacted under the authority 
of Parliament the statutum de moneta, consisting of three 
parts. The first of these seems to be a true statute, or act of 
general legislation, and provided that no one should presume 
to pay or receive any money but the coins of the king of 
England, of Ireland, and of Scotland, on pain of forfeiture; 5 
nor should anyone bring into England money except for his 
expenses, or, unless driven by tempest, land at any port other 
than those at which there were inspectors, to whom the 
amounts and kinds of money brought in should be made 
known. 8 

Edward II. made no change in his coins; but he found 
them in a sadly depreciated 7 condition, because of such prac- 
tices as clipping, or bringing in light foreign coin; and so 
in 1310 it was ordered by proclamation that money should 

1 /bid., p. 39. a RODING, op. cit., Vol. I, p. 388. 

1247. 4 Edward II., 1307-1326/7. 

20 Edward I., chap. 4, cited by RUDINO, op. cit., Vol. I, p. 382. 

Tbo other portions of the statute simply looked to the enforcement of these 

' It seems to hare been depreciated by one-half. Ibid., p. 399. 


be current at the value it had borne in the reign of Edward 
I., and that no one should on that account enhance the price 
of his goods, " because it was the King's pleasure that the 
coins should be kept up to the same value as they were wont 
to bear." ' 

Passing to the next period, the long reign of Edward III. 
(1326/7-77), it may be said, in general, that he was facing 
the same difficulties connected with a worn, depreciated, and 
confused money which had baffled his predecessors and were 
then confronting his contemporaries on the continent* 

The inadequacy of the amount of bullion brought to the 
mints he tried to overcome by requiring the exporters of wool 
to pledge the importation of a certain amount of bullion for 
every sack of wool exported.' The difficulties arising from the 
importation of inferior foreign coin he met by the attempt to 
agree with the Flemish upon certain principles to be applied 
in the coinage, with the understanding that the coins of each 
country should be given currency in the other. 4 He also pro- 
vided for the coinage of half pence and farthings/ and intro- 
duced the coinage of gold into his monetary system.* But 
he seems finally to have become discouraged, and resorted to 
the debasement of the silver coins and of his new gold pieces. 

The difficulties of the situation and the method of coping 
with them may be illustrated by the incidents of the Turney, 
a certain " black money" made in Ireland and circulated in 

1 Ibid., p. 999. 

CUNNINGHAM, op. cit., p. 354, n. The general principles of coinage and 
monetary problems were arousing attention at the time, as if evidenced by the 
appearance of the first treatise on money that of Oresme, Bishop of l.itioni. Dt 
Mutattone Monet arum. 

* 40s. was the sum proposed in 1339 ; 13s. 4d. was decreed in 1340. BcittXO, op. cit, 
Vol. I, p. 410. 

Ibid., p. 416. The Flemish coins, while allowed to circulate, were not to be 
forced into circulation, hot taken by those " who of their own accord would receive 
thcm."-/6id.. pp. 416, 421. 

KEXTOX, op. cO., p. 17. This was a part of the plan for an international 


England, "to the injury of the king's sterling money and his 
no little loss and prejudice." Proclamation was therefore 
made to prohibit the circulation of it on pain of forfeiture of 
money and goods. 1 But great inconvenience was found to 
result from the prohibition, on account of the scarcity of ster- 
ling money. When this was made known to the king it was 
provided that if, on inquiry, it should be found more advan- 
tageous to the public to allow the circulation of the black 
money, a proclamation should issue authorizing it until an 
adequate supply of other money was provided. 2 

Four years later (1343) another unsuccessful attempt was 
made to introduce gold into the English coinage system. 
After an examination before Parliament of merchants, gold- 
smiths, and moneyers, experts in the subject, it was ordered 
that one kind of gold money should be made both in England 
and in Flanders, 3 to be current at such weight, alloy, and value 
as the king and Council should appoint, all other gold money 
being prohibited in both countries. Accordingly, three kinds 
of gold coin were provided for by an indenture: The florin, 
weighing 108 grains, the half and the quarter florin, of 
proportionate weight, and of a fineness equal to 23 carats, 
3 grains of pure gold to ^ grain of alloy. 4 These coins were 
at first declared current at 6s. 3d. and Is. 6d., respectively; 5 
but the following year (1344) it was found that they were 
rated too high in terms of silver, 6 and it was accordingly 
ordered that they should be taken in payment only with the 
consent of those to whom they were offered; and then a month 
later they were declared to be bullion to be received accord- 
ing to their value as such. 7 Another experiment yet had 

l An illustration of the mode of sanction in legal-tender provisions applying to 
executed contracts. 

BUDINO, op. cit.. Vol. I, p. 400. 3 KEN YON, op. cit., pp. 17, 18. 

Mil fine. 

January 27, 1343 Cobbett's Parliamentary History, VoL I, p. 200. 

See p. 35, n. 4. 1 BUDINO, op. cit., Vol. I, p. 421. 


evidently to be tried. The next gold coins attempted were 
called "nobles," and weighed 138 T - j grains' of gold of the 
same fineness. They were declared current at 6s. 8d. Their 
coinage took place daring the year in which the florins were 
called in,' and they were not to be forced in payment of 
earns less than twenty shillings.' This experiment succeeded 
and gold became a permanent element in the coinage system 
of England. 

In this same year (1344) occurred the second debasement 
of the silver coinage, 4 and two years later (1346) both the sil- 
ver and the gold coins were reduced in weight* By this change 
the silver pound in tale * was reduced to a weight less by 
more than 10 per cent, than its original weight, while the 
gold pound weight was divided into 42, instead of 37 , nobles, 
and the gold coin thus reduced by more than 7 per cent to 
pass current at 6s. 8d. as before. 7 

Notwithstanding the reduction here noted, in 1351 ' the 
English coins are said to have been " so much better than 
the coins of any other nation that they were exported and 
base money brought into the realm, to the impoverishment 
of the people." Accordingly, both gold and silver coins were 
reduced in weight; the gold noble to 120 grains,' and the 
silver shilling to 216." 

I That is, the pound was divided into 394 such coins. 


A case of limited legal tender, the limit being a minimum. It might be stated 
that the ratio of these to silver was 11 ,Y* T A : 1. while that of the previously coined 
florins had been 12 iilii : 1. LIVERPOOL, op. cit., pp. 40, 50. 

/Wd., p. 39. The pound was divided into 22s. 2d., thus debasing the pound in 
tale 8 + per cent. 

''Ibid.; KBVTOH, op. cit., p. 21. 

The pound in weight was then divided into 22s. 6d. 

1 This made the ratio 11 Mil : 1 .LIVERPOOL, op. cit.. p. SI. 

(This date is given by RUDINO, op. cit.. Vol. I, p. 436. LIVERPOOL gives 1953, op 
ciJ.. p. 51. 

From 128| to pass as before at te. 6d. 

From 240 grains. This made the ratio 11 M:l.-*Brto*, op. cit., p. 11; 
LIVERPOOL, op. cit., pp. 40, 51. 


As no other alteration was made in the coinage during 
this reign, or indeed for half a century, it may be well to 
inquire into the motives leading to these three alterations in 
the coinage and their effects on the condition of affairs then 
existing in the kingdom. In the first place, they caused great 
dissatisfaction among the people. The bishop of Winches- 
ter, who seems to have been held responsible for the second 
of the three debasements, became most unpopular, and it was 
said of him that " he loved the King's commoditie better than 
the wealth of the realme and common people." 1 It is to be 
noted also that the statute to which reference has been made, 2 
attempting to limit the royal power, dated from the year of 
the third alteration; from which it may be inferred that 
this method was not satisfactory to the people. 

The question suggests itself whether the profits which 
arose from calling in and recoining the money of the realm 
did not furnish an adequate explanation of these debase- 
ments. This question indicates the necessity of at least a 
brief discussion of the nature of those profits and the part 
they seem to have played in controlling royal policy. 

The profit arising from the operations of the mint assumed 
two forms : that arising from the shere* or remedy allowed 
because of the rudeness of the art of coinage, and that known 
as seigniorage, or contribution to the king, over and above the 
cost of mintage, 4 claimed by virtue of the prerogative. 5 Of 
the shere it is needless to speak here, as advantage seems to 
have been taken of it very rarely," but seigniorage was an 
avowed right claimed by the sovereigns of Europe. It 
seems to have been of Gothic rather than of Roman origin, 
and was an important element in the royal revenues. There 

i See LIVERPOOL, op. cil., p. 39, n. 2 See above, p. 11. 

RCDINO, op. cit.. Vol. I, p. 185. * " Brassage." * LIVERPOOL, op. cit., p. 116. 

Elizabeth is charged with having underpaid the master of the mint, with the 
understanding that he might recoup himself by making the coins as light as pos- 
sible within the limits. See BCOINO, op. cit., Vol. I, p. 185. 


were two methods of appropriating this forced contribution. 
The method which prevailed on the continent in the earlier 
times was that of taking the profit out of the coin itself, return- 
ing to the merchant who had brought bullion or coins to the 
mint a given number reduced in weight 1 The practice which 
prevailed in England, however, was this : The bullion was 
first assayed and coined, the seigniorage and brassage then 
deducted in the coins already made, and the remaining coins 
returned to the merchant who had brought the bullion to 
the mint. 1 The amounts to be deducted were prescribed in 
the indenture with the master of the mint. For example, 
in the first coinage of gold nobles (1344), according to the 
indenture, from a pound of gold 15 sterling were to be made. 
Of these, 3s. 6d. was to cover expenses of mintage, 1 was to 
be deducted for the king, and the remainder, 13 16s. 6d., 
was then to be given to the merchant. 1 The following year 
(1345) the sum to be held by the master of the mint was 
reduced to 2s. in the pound,' that for the king to 5s., which 
would indicate that gold was not being brought in adequate 
quantities to the mint, and greater inducements in the form 
of diminished cost were offered. 

At the same time, for the coinage of silver the seignior- 
age was 6d. for every pound weight, and the allowance to the 
master of the mint 8d., leaving for the merchant 21s. for 
every tower pound of silver brought to the mint 4 

i LIVERPOOL, op. cit., p. 118. 

RODIMO, op. cit.. Vol. I, p. 184. Sometimes the larger part of the kin*'* 
hare was granted to induce merchants to bring bullion. See ibid., p. 434. 

* Ibid., p. 419 (see note 6). 

Ibid., p. 427. It would seem that there should be some definite relation between 
the legal ratio of gold to silver coin and the ratio actually existing under the regol.i 
tions of the mint. For example, if a merchant took gold and silrer bullion to li. 
mint to be coined, he should hare got a number of coins of each metal which 
would bear to each other a ratio approximating the legal ratio. Such was not 
the case, however. In 1344-45 the legal ratio of gold to silver was 1:12 iff If. while 
the ratio obtained by comparing the value in coin of a pound of gold with thai of 
the same weight of silver to the merchant who took the bullion to the mint was 


Of course, when a debasement occurred the holder of 
coins of the earlier weight would gladly bring them to the 
mint, as he would obtain a greater number of coins of the 
diminished weight, and so a profit on them, unless they 
were greatly worn and clipped ; and, making allowance for 
these factors, the king would have his seigniorage on all the 
money of the realm. 

Doubtless Edward III. felt the need of increasing his 
revenues in all possible ways ;' but there does not seem evi- 
dence to convict him of corrupt motives in dealing with his 
coinage. The state of the English money was deplorable, 
because of the exportation of full- weight English money 2 and 
the importation of lighter foreign pieces, especially Scotch ; 3 
so that the alterations seem rather attempts to increase the 
amount in circulation, to prevent exportation, and to adapt 
the legal to the actual value of the coins in circulation. 4 

With Edward's successor, Kichard II. (1377-99), was 
inaugurated the policy which ripened into the mercantile 
policy, and from the time of his reign a good currency as a 
public service and the accumulation of treasure as a political 
necessity were sought. 5 The long period during which this 

1:13}. A comparison of RCDING'S Tables of the Seigniorage and of those giving 
the legal ratios between coins shows such differences to have been the rale, and not 
the exception. 

Because of the wars with France and the poverty of the people after the 
scourge of the black death (1348) and the growing power of Parliament. GREEN, 
op. cit., pp. 429-61. 

See BDDINO, op. cit., Vol. I, pp. 414, 438, 440, 445,447, for petitions and provisions 
against carrying good money out of the realm. 

:l In 1355 the coins of Scotland of an earlier date, being of the English weight 
and standard, were allowed currency ; it was found necessary in 1367 to prohibit the 
currency of any foreign money. Ibid., pp. 443, 449. It should be noted that the func- 
tion of exchanging coins of different metals or of different nationalities, with its 
attendant profits, was also monopolized by the government ; see Ibid., pp. 422, 443. 
And this, as in the case of the coinage, was enforced by penal provisions. 

*This is put in stronger terms by CAELILE, The Evolution of Modern Money, 
p. 101, when he says that never before the time of Henry VII. were alterations made 
for purposes of profit. See, also, ASHLEY, op. cit., p. 168. 

'CUNNINGHAM, History of Englith Industry and Commerce in Mediaeval Times, 
p. 377. 


policy prevailed was interrupted by the chaotic condition 
prevailing daring the reign of Henry VIII. (1509-1540/7) 
and his immediate successors. On that account the period 
may be subdivided, the years from the accession of Richard 
II. to the death of Henry VII. (1377-1509) being first con- 
sidered together. 

No alteration in the coinage occurred during the reign of 
Richard II., but in 1381 an interesting inquiry was con- 
ducted into the causes for its deplorable state, and various 
remedies were suggested. 1 A number of persons who might 
be considered experts were questioned before Parliament, and 
gave their views in brief replies to definite questions. As 
the state of the gold coinage demanded particular attention, 
it was suggested that gold should be allowed to pass by weight ; 
and it was also proposed, if a recoinage should be determined 
upon, that the king should remit his seigniorage.* The only 
result of the inquiry seems to have been a statute prohibiting 
the exportation of the precious metals in any form,' and the 
provision for more rigorous police measures in support of 
this. 4 The petitions and complaints of the Commons with 
reference to the exportation of good and importation of bad 
money continued during this and the following reigns.* 

The next alteration to be noticed occurred in 1411, when 
Parliament, "because of the great scarcity of money at this 
time within the realm of England, and because of other 
mischiefs and causes manifest," ordained* that the pound of 
gold should be divided into 50 nobles 1 and the pound of 
silver into 30 shillings.' 

> BUDINO, op. cit.. Vol. I, p. 463, teq. This wu 9s. 6d. in the pound. 

* Except for certain purposes to France. * Ibid., p. ML 

ft/bid., pp. 458, 461, 462. 476, 483, 497,508,908. 

This act was called an ordinance, but had all the characteristic* of statute. 
-Ibid., p. 494. 

T Instead of 45. That is, the new coin weighed 108 grains. 

Instead of 25. That is, the new shilling weighed 180 trains. As the nobles ww 
to pass at the same nominal ralne. the ratio was 10 iff : 1.-U VEMUOL. op fit. p. tt. 


The coin seems at this time to have been the subject of 
corrupt practice on all sides. Individuals clipped, counter- 
feited, and exported it ; and it appears from the account given 
by the historian Daniel 1 that corrupt methods prevailed at the 
mint. In fact, the gold coin suffered so that in 1421 it was 
found necessary to ordain its passage by weight. 2 The 
account of this particular debasement should not be left with- 
out noting the fact that it occurred in accordance with an act 
of Parliament. 

An interesting ordinance in the nature of a legal-tender 
provision was published in 1429. 3 Foreign merchants had 
introduced a custom of refusing to exchange their goods for 
silver and accepting only gold coins, which they carried out 
of the realm. The king, therefore, ordained that no alien 
merchant should " constrain or bind any of his liege people 
by promise, covenant, or liege to make true payment in gold 
for any manner of debt due to him, nor refuse to receive pay- 
ment in silver," upon penalty of the double value of the 
sum due. 4 

In 1445, an ordinance providing for something very like 
the token coins of today was published. Because of the 
lack of small coins, the Commons petitioned that the pound 
of silver might be divided into thirty-three instead of thirty 
shillings, to be coined into half -pennies and farthings, which 
should be given currency to this extent that in every pay- 
ment of twenty shillings twelve pence might be of these lighter 
coins. 8 The ordinance was to endure for two years, at the 
discretion of the king. 

In 1464, because of the scarcity of money and the small 

> Quoted in COBBBTT, Parliamentary History, Vol. I, p. 313. 
Ibid., p. 340. 3g Henry VI., chap. 28. 

BODING, op. cit.. Vol. n, p. 14. The legislation applied evidently to both time 
and cash transactions. 

' Ibid., p. 18. " There is no comment by which any inference as to the extent or 
effect of this ordinance can be obtained." 


amoant of ballion broaght to the mints, another redaction 
was made. The silver pound was then divided into 87s. 6d.' 
The weight of the gold noble was not diminished, hut ita 
nominal value was increased from Os. 8d. to 8s. 4d., and a new 
goid coin* was introduced.' It may be noticed that by thia 
time the silver pound in tale had been reduced by 46| per 
cent, of the weight it had prior to 1299. 

At the end of Henry VII.'s reign the condition of the 
money of the country was such that resort was had to the 
use of private tokens to supply the lack in the circulating 
medium. 4 The cupidity and miserliness of the king were 
almost boundless, so that the administration of justice was 
abused, vigorous prosecutions were carried on, and exces- 
sive fines imposed to fill his coffers.' Yet the abuse of his 
coinage power for the sake of gain was not resorted to. That 
remained for his spendthrift son.' 

In presenting the history of the following period no detailed 
account of the changes wrought in the money of the realm 
will be attempted. It was a period of chaos. The policy of 
Henry VIII., after he had dissipated the treasure left by 
his father, was the policy of a spendthrift; and, like other 
spendthrifts, he resorted to all possible measures to secure 
means of indulgence. The forms of law were often preserved 
when the spirit was grossly violated. This was particularly 
true in his treatment of the coinage. The prerogative had 
been confirmed without limit in the time of Henry VII. , as 

I That is, the shilling was reduced from 180 (Trains to 144. 

The "angel," current at 6s. 8d.. the old value of the noble, bat weighing U 
trains, instead of 108 grains ; making the ratio of gold to silver 1 : 11 4S I- 
POOL, op. cit., p. 53. 

i RUDINO, op. cit.. Vol. II, p. 33 ; LIVERPOOL, op. cit., p. 40. 

These circulated as late as the beginning of the seventeenth century-- 
op. cit., p. 69. 

JMd., p. 64. 

It U possible that he closed his eye* to corrupt practice* in his mint. That 
would be different from an abuse of his prerogative. -See RCDIXO. op. eit^ VoL U. 
p. 60. 


has been pointed out. 1 Of this he took advantage in every 
conceivable way. 

The first alteration made by him, however, was not par- 
ticularly alarming, and but carried out the policy which had 
led to former reductions that of preventing exportation 
of English money for recoinage at foreign mints. This 
change was made in 1527, and by it the tower pound was 
divided into 42, instead of 37, shillings. 2 

The proclamation legitimizing these new coins is particu- 
larly interesting because of two features: It prohibited 
any increase of prices "under color of the money being 
enhanced," 8 and by it the terms in which antecedent obli- 
gations were to be satisfied were carefully regulated. 4 

Never before had the standard of the metal of either gold 
or silver been altered. From the time at which Edward III. 
had successfully introduced gold into circulation, 5 |-|^ 
had represented the proportion of fine metal to alloy in all 
gold coins. From the earliest coinage in England f % had 
represented the sterling silver. On both metals Henry laid 
sacrilegious hands. The fineness of the gold coins he 
reduced successively to ||f, 6 ff, 7 ff, 7 and f|f. 8 

The fineness of the silver coins he reduced to -f, 
-j^-, and T 4 2-. 9 This debasement was carried one degree 
farther by Edward VI. , when -fy represented the propor- 
tion of precious metal to alloy in English silver coins. 10 

At this point may be given a brief account of the method 

i See above, p. 13. 

2 The tower pound was divided in 42s. 2 1 .id., or the Troy pound already intro- 
duced into 45s. The shilling was now reduced from 144 to 131 grains. The nominal 
value of gold coins was changed, but no change in their weight or alloy occurred at 
this time. LIVERPOOL, op. tit., p. 41 ; BDDIMO, op. tit., Vol. II, p. 74. 

8 That is, the nominal value increased, while the amount of metal remained the 
same ; or, the nominal value left the same, while the amount of metal was diminished. 
/6td., pp. 78,87. 51344. 

1543.-KKNYON, op. cit., p. 94. T 1544. Ibid., p. 95. 

1545. Ibid., p. 95 ; see also p. 90. 1543. LIVERPOOL, op. cit., p. 98. 
10 BCDINO, op. cit., VoL II, p. 108. 


by which the coins were restored to a condition almost equal 
to their former weight and fineness. The gold coins had 
been debased to a smaller extent than the silver coins. The 
relative values set upon the coins ' had been such as to over- 
value the silver in terms of gold, so that the gold coins were 
all hoarded. Edward VI. early gave his attention to the 
restoration of the coins, and the first effort put forth was in 
the direction of calling forth the hoarded gold. This was 
accomplished by raising the nominal value of the gold coins 
to a value one-third greater than that at which they had been 
estimated in 1527. 7 The next step was the issue of silver 
coins, likewise of one-third greater value.' The third step 
was to decry the base coins issued since 1527.* This was not 
done by one act, but two proclamations issued, by each of 
which they were reduced in legal value. They were finally 
wholly cried down by Elizabeth in 1660,. after she had 
issued new coins of the original standard of fineness (fj), 
and of the weight at which they had been made in 1527.' 
The act of crying down the coins seems to have been 
rarely performed in connection with English coins.* In 
those foreign jurisdictions within which frequent recoin- 
ages were had for purposes of profit 7 this process must have 
been a necessary one ; for only by some such compulsory act 
as this would the owners of coins have been induced to bring 
them to the mint to be recoined. Only by force could such 
a contribution to the king's revenues have been obtained. 

> TheM values were (1545) A : 1 ; (1540) 5 : l.-LmmrooL, op. cit., p. 101. 

'The sovereign which had been current for 22s. Od. was made current for JO*. 
BODING, op. cit.. Vol. II, pp. 106 ff. 

The tower pound was dirided into 58*. 3d. LxrarooL, pp. ctt., pp. 40, 10ft, 

April 30 and May 11, 1551. Resort was had to severe police measure* to pre- 
vent an increase of prices. RCDIXO, op. cit., VoL II, p. lift. 

LxVttPOOL, op. cit., pp. 110, 111 ; RCDINO, op. c<t, VoL II, 137. This proclama- 
tion crying down the debased coins defends and explains the action of the QOMO in 
attempting to restore the coinage to something of its former excellence. 

See above, p. 29, n. 5. ' CAXLILX, op. c/.. p. 101. 


In the instances cited, however, may be observed an illus- 
tration of how the power to deprive coins of their legal- 
tender quality could be utilized for the sake of improving 
the condition of the money of the realm. 

The restoration of the coins is counted one of the glories 
of Elizabeth's reign; 1 yet before the close of her career she 
allowed herself to make a final reduction. The silver tower 
pound was then divided into 58s. l^d-, 2 and the gold coins 
were likewise reduced in weight. 8 The reasons which led to 
the debasements of this period are not difficult to find. 
Already, in 1513, the king, Henry VIII., had exhausted the 
millions left by his father and drained his subjects by 
repeated subsidies,* so that his chosen policy of foreign war- 
fare was thwarted. It was not to be hoped that in the period 
during which "all the constitutional safeguards of English 
freedom were swept away," when arbitrary powers of taxa- 
tion, legislation, and imprisonment were claimed and exer- 
cised, 5 such a resource as the coinage power would remain 
neglected. For the first debasement, in 1527, a reason was 
found in the difficulties of international trade ; 6 for the later 
debasements under Henry no other reason need be sought 
than a desire to augment his revenues. 7 

The first debasement, under Edward VI., has a special 
interest, because it was frankly resorted to in order to gain a 
sum for the king's treasury with which the expenses of the 

i PBOCDE, History of England from the Fall of Wolsey to the Death of Elizabeth 
(N. Y., 1890), Vol. Vn, p. 465. 

Instead of 56s. 3d. LIVERPOOL, op. cit., p. 41. 

s So that the ratio was 11 J|J : 1 for coins of the old standard of fineness (}|i fine), 
and HiV 1 for coins of the Crown standard (JJ fine). The latter standard was 
that which prevailed, though coins of both standards circulated until 1732, when 
those of the ancient fineness were declared no longer current. Ibid., p. 32; KENYON, 
op. cit., p. 100. 

* OBBKN, Short History of the English People (N. Y., 1880), p. 320. 

* Ibid., p. 341. See above, p. 40. 

* COBBETT'S Parliamentary History, Vol. I, p. 559. 


restoration of the coins might be undertaken. The king's 
journal bears witness to this. 1 

There remains to be considered the period from 1003, 
when Elizabeth died, until 1816, when silver was finally 
given a secondary position in the English system. During 
this period the weight and denominations of gold coins were 
altered in order to secure the concurrent circulation of coins 
of both metals ; but no change was made by law in the char- 
acter of the silver coins. 1 

At the time of the reduction in 1601 the legal ratio of 
gold to silver was lower than it had been at any time since 
the early part of the fifteenth century,' excepting, of course, 
the chaotic period under Henry VIII. From this time the 
value of gold bullion changed rapidly in terms of silver, 4 
and although the mint ratios were frequently altered, all 
efforts to retain both metals in circulation failed. In 1604 
the mint ratio of gold to silver was raised 10 per cent. an 
increase not great enough, however, to bring gold from 
countries where it was more highly rated. In 1611-12 an 
alteration in the same direction, going too far, drove the 
silver out as the gold came in, causing so great a scarcity of 
silver that the old laws against exportation were revived 
and re-enacted. 5 No remedy was found until, by the simple 
passage of time, 8 in the development then in progress, the 

i "April 10, 1551. Also it was appointed to make 30,000 pound weight for necessity 
somewhat baser to get gains 100,000 pounds clear, by which the debt of the realm 
might be paid, the country dofended from any sudden attempt, and the coin 
amended." Cited by RCDINO, op. cit.. Vol. II, p. 106; see also p. 108. 

The legislation in 1774, which will be noted, left them unaltered except as to 
their legal -tender power. See below, p. 45. 


It was, in 1601, 10 ||{f : 1. -LIVERPOOL, op. cit.. p. 58. 

* See the proclamation cited by LIVERPOOL, op. cit., p. 69. Strangely enough 
another change in the same direction was made in 1630 (Ibid., p. 60), increasing the 
difficulty. See RUBBWORTB, cited by LIVERPOOL, op. cit,, p. 72. 

About the time of the beginning of the Commonwealth (16tt) ./&<*.. p. m 


market value of gold in terms of silver overtook and soon 
passed the mint value of that metal. ' 

Added to the difficulties growing out of the maladjust- 
ment of the mint ratios there were still great inconveniences 
created by the fraudulent practices of counterfeiting and 
clipping. "So deplorable was the condition of the coin 
that nothing could be purchased without a dispute. On a 
fair or a market day the clamours, reproaches, the taunts, the 
curses, were incessant, and it was well if no booth was over- 
turned, no head broken The labourer found that the 

bit of metal which, when he received it, was called a shilling 
would barely, when he wanted to purchase a pot of beer, go 
as far as a sixpence." 2 

It was to meet these conditions that William, in 1695, 
threw upon Parliament the responsibility of finding a remedy. 
Resort was first had to new and more rigorous police measures. 
It was then proposed that the silver coins be again reduced 
in weight and the same remedy be applied that had been 
employed by Edward I. 8 four centuries before; that is, that 
the legal be adapted to the actual value of the coins : but this 
proposition was rejected, and the great recoinage of the silver 
of the realm was carried out in the years 1695-98, leaving the 
silver coins unchanged* In 1662-63 there had been an 
alteration in the gold coins, caused by the market value of 
the gold in terms of silver creeping past the mint value. 
Those coins in circulation had been raised in value and new 
twenty shilling pieces had been issued, to be known as 
"guineas." 5 These coins had immediately become generally 

1 Rising probably little under 33 per cent, between 1604 and 1664. Ibid., p. 66. 

JM ACAULAY, History of England, Vol. V, p. 89. 

* 1299. See above, p. 30. 

< See MACAULAT'S account, op. cit., pp. 89 f. ; LOCKE'S Writing* (London, 1823), 
Vol. I, p. 131 ; LIVERPOOL, op. cit., pp. 79 f . 

&KKKYON, op. cit., p. 170. In 1670 these coins were reduced in weight, but left of 
the same nominal value and still circulated at a great advance on their mint value. 
Ibid., p. 170; LIVERPOOL, op. cit., p. 62. 


current at a value higher than the indenture rate, and in 
1695 were passing generally at 80s. 1 

The provision for the recoinage of silver caused the gold 
coins to fall in value relatively to silver, and it was resolved 
by the House of Commons that they should not pass at a 
value higher than 28s., which value was soon reduced to 26s. 
On the basis of this resolution an act was passed imposing a 
penalty on anyone who should receive or pay the twenty- 
shilling piece or guinea at a higher rate than 26s.* This, 
by another act of the same session, was reduced to 22s. In 
1698 their price had fallen to 21s. 6d., at which rate they 
were taken by the officers of the revenue. This rating of 
the gold coin was not, however, such as to prevent the 
exportation of silver, and in 1717* the legal value of the 
guinea was reduced to 21s. 4 

Even this estimate of gold in terms of silver was still too 
high, however, to bring silver into circulation,* and during 
the century it remained scarce, so that gold became the 
customary medium of exchange and the true standard of 
payments.* In 1774 this state of facts was recognized by 
legislation, and the legal-tender power of silver coin was 
limited to 25 in any one payment, an excess of that 
amount being paid by weight at the rate of 3s. 2d. to the 
ounce. 7 This act, the duration of which was for two years, 
was in 1776* renewed for another period of the same length. 

i KKNTOW, op. cit., p. 178. '/bid., p. 185. 

LIVERPOOL, op. cit., pp. M f. Newton was then master of the mint, and it was 
according to his suggestion that this step was taken. 

In his report Newton said that 8d. or lOd. would bare to be taken from the value 
of the guinea to make its value in England accord with that in other countries. Be 
proposed the subtraction of only 6d., howerer. In HOBTON, Silver Pound, Appendix, 
this document may be found. COBBBTT, Parliamentary History. Vol. VII, pp. 523-4. 

Between 1717 and the end of the century the amount of silver coined at the 
English mint was equal to 384,760 17s. 5*d. LIVERPOOL, op. cit.. p. M. 

As Carl ile points out (op. cit, p. 742), sUrer coins were used in wag* payneoto 
and retail trade. They were, howerer, merely token coins, supported in value by 
their relation to gold and by being actually, if not legally, limited in quantity. 

1 BUDINO, op. cit.. Vol. IV, p. 35. 16 Oeorge III., chap. U. 


In 1778 ' it was extended to 1783, when it was allowed to 
expire. In 1798 " it was again revived, and continued until 
1816, when the silver coins were reduced in weight and 
given the position of representative coins having a limited 
legal-tender power. 3 By this act gold was declared to be 
the standard coin of the realm ; the silver pound was to be 
divided into shillings weighing 87^ grains, 4 and it was 
decreed that silver coins should be considered representative 
coins, legal tender to the value of two guineas only. 


The questions with which the inquiry began may now be 
called to mind, and such answers as have been obtained from 
the English experience stated. 

In the first place, it appears that to the Crown belonged 
the power over the coinage. That power was exercised some- 
times in such a manner as to accord with the expressed 
wishes of Parliament ; 5 sometimes in such manner as deliber- 
ately to oppose those wishes; 6 sometimes without regard to 
whether Parliament had expressed any wish on the subject 
or not. It followed, therefore, that the money in which 
obligations were met could be altered by act of the Crown. 

In the second place, the legal-tender quality was pos- 
sessed by coins of both metals at specified relative values. 
There were inconsiderable limitations imposed upon one 
or the other, sometimes a maximum 7 and sometimes a 

'18 George III., chap. 45. 

338 George III., chap. 59. These are cited by LIVERPOOL, op. cit., p. 144. 

56 George III., chap. 68. HOETON, op. cit., p. 278, gives the report of the Lords 
of the Committee of Council on which the statute is based, as well as the proclama- 
tion following it. 

That is, the Troy pound was divided into 66s., the tower pound into 61 &S., 
instead of 62s. and 58s. l'/4d.. as before. In 1817, the sovereign replaced the guinea as 
the 20s. piece of gold. See Ibid., p. 282; 57 George III., chap. 113. 

" See above, pp. 82, 37. See above, p. 10. 

' See above, p 1ft 



minimum 1 limit being set; but, in general, it may be said 
that both gold and silver coins were a lawful tender; that 
in cash transactions the buyer, in time transactions the 
debtor, had the right to select the form of money to be 
employed. In the case of cash transactions it was found 
necessary to supplement this law by penal legislation and by 
legislation regulating prices.* But in the case of time 
transactions, the civil power of the courts was an adequate 
sanction. 1 

In the course of the period considered the pound in tale 
of silver was reduced by 65 $f per cent, of its original 
weight* The reasons which led to this result were two:* 
In the first place, there was the desire and purpose to reme- 
dy the " scarcity of coin," which was the chronic complaint 
of the people, the desire to secure a circulating medium, and 
to prevent criminal practices. The principles which should 
control the exercise of the power were ill understood. The 
idea of the coinage as the personal property of the prince, to 
be exploited for his benefit, was not wholly outgrown. Yet, 
on the whole, the review of the period is ill presented if it 
does not convey the impression of a general tendency on the 
part of government to do the right and honest thing and to 
meet the needs of the people in this vital matter of the money 
with which the ordinary transactions of life were performed. 

In this fact that mistaken policy controlled to so large 
an extent the exercise of the power is found the answer to 
a question which must have suggested itself in the course of 
the discussion. That question is: Why did Parliament not 
succeed in its attempt to assume the coinage power as it suc- 
ceeded in assuming the power over taxation ? One reason 
for failure in this direction was the fact that Parliament had 

i Soo aboTc, p. 19. See above, p. 20. See above, p. S&. 

Before making silver a subsidiary element in the coinage. LrrurooL, op. 
cit.. p. 42. 

/Wd., p.115. 


no other remedy to propose, no other line of conduct to 
suggest than that pursued by the Crown. In 1247 it was 
the Council which proposed a debasement; 1 in 1411 
Parliament effected one. J There seems to be no evidence to 
indicate that the power would have been more wisely exercised 
by Parliament than by the Crown. 

But there was a second, and less worthy, motive which 
sometimes prevailed, namely, the desire for revenue. This 
was the controlling reason in the case of the debasements of 
Henry VIII. and Edward VI. No relief could have been 
expected from the degenerate Parliament of that time, how- 
ever, willing as it was to give to kings' proclamations in gen- 
eral the force of law. 3 

It should be noted that the cases cited in which the law 
of tender was formulated by the courts 4 date from the period 
immediately subsequent to the abuses of Henry and from the 
period of parliamentary subservience. It should be likewise 
noted that from the period at which that law was formulated 
debasements cease. There is no intention of maintaining a 
direct connection between the formulation of the law and the 
cessation of abuses. The connection seems rather an indirect 
one. The law was acknowledged and acquiesced in. The 
Crown had the right to change the money in which contracts 
were settled, but the commercial development was such as to 
require a fixed standard of payments ; the interests of the gov- 
ernment and of the individual became closely identified 
through the organization of the public debt; the political 
development led to a keener sense of public morality; and, 
perhaps most important of all, the quickened intelligence 
and awakened public sentiment led to a more intelligent 
understanding of the principles which should govern the 
administration and exercise of such a power. 

> See above, p. 29. See above, p. 37. 

* See above, p. 8, n. 2. See above, p. 25. 


Methods of Control over the Colonies Idea that Legal-Tender Quality 
Must be Expressly Bestowed Substitutes for Money Made a 
Legal Tender Also Commodities at Specified Rates Foreign 
Coin Domestic Coin Bills of Credit Control Assumed by 

HAVING followed the story of the English policy with 
reference to legal-tender money to a date at which that policy 
seemed to culminate, ' it is now proposed to turn back to an 
earlier date that at which the colonies were established and 
new centers of activities acknowledging the sovereignty of 
the English government came into existence. The present 
chapter will deal with the subject of legal tender in the 
colonies which afterward became the United States of 

As to the means by which the English government exer- 
cised control over the colonies, it may be said that in the 
earliest years of the colonial period * the superintendence of 
the king over the colonies was exercised by the Privy Council. 
In 1634 a board was created, called the " Lords Commission- 
ers of Foreign Plantations," which consisted of certain high 
officers of state, empowered to make laws or ordinances 
affecting either the public condition or private property of 
the colonists. 1 

In 1643 the commission known as the "Lords of Trade 
and Plantations " was created, composed of a governor and a 

i In the act of 181.-8ee above, p. 4ft. 

* Prior to 1834. Charters were granted to Virginia in 1608; to Plymouth in 1610; 
to the colony of Massachusetts Bay in 1628; etc. 

PBOTHINOBAM, Rite of the Republic of the U*it*d State* (6th ed.). P. & 



council of whom five were peers and twelve members of the 
commons. 1 

In July, 1660, an order in Council was passed creating 
ten lords of the Council, or any three of them, a board to meet 
twice a week to receive petitions and papers relating to the 
colonies; and on November 7 of the same year the king 
created a commission 2 known as a "Council of Foreign Plan- 
tations," which was required to correspond with the governors 
of the colonies, and to devise means of bringing the colonies 
into a "more certain civil and uniform government." In 
1674 this council was dissolved 3 and a committee of the Privy 
Council was appointed by the king to consider matters relating 
to the American colonies. This committee was to sit once a 
week and report to the Privy Council, and they continued to 
do so through the reign of James II. 4 

During this period 5 representative assemblies had been 
organized in the colonies, and these, together with the 
governor and council as co-ordinate branches, exercised the 
law-making power. 8 These assemblies were regarded as 
drawing their power from the Crown, and were limited in all 
their proceedings by the charters of the respective colonies, 
or by other confirmatory acts of the Crown. 7 

It is unnecessary here to speak of the revocation and 
regranting of the charters in the decade from 1680-90. 
This may be treated as a period of abnormal disturbance. 
During the reign of William and Mary, and during most of 
the period covered by the reigns of Anne and the first two 
Georges, 8 the colonial administration was arbitrary and 
showed strict adherence to the prerogative, though the 

i FROTHINOHAM, op. cit., p. 45. 2 Ibid., p. 50. 

'Its powers had been increased in 1671. * Ilml.. p. 77. 

* Prior to the formation of representative assemblies the governor and council 
appointed by the Crown exercised these powers. STORY, Commentary on the Consti- 
tution of the United State* (3d ed.), 43. 

FROTHINOHAM, op. cit., p. 18. * STOET, op. cit., 185. 1688-1760. 


people through their assemblies shared in the control of 
local affairs. During this period the formal channel of 
communication between the Crown and the colonies was 
the "Lords of Trade and Plantations/ 1 created in 1098. 
This board, consisting at first of a president and seven 
members, was afterwards enlarged, and to it was assigned 
the general oversight of American affairs and the duty of 
recommending measures relating to the colonies. 1 

As to the power of Parliament to enact laws which should 
be binding on the colonies, there was much doubt. The 
home government always maintained the doctrine that Parlia- 
ment could bind the colonies in all cases whatsoever, but no 
act was understood to apply to the colonies unless it was 
expressly declared to do so. 

It was of course the policy of the colonists, so far as pos- 
sible, to deny such authority, except when their necessities 
forced them to comply with parliamentary measures expressly 
extended to them ; ' and some went so far as to deny that any 
act of Parliament could bind the colonies without their 

The notions of rights and remedies which the colonists 
retained were those of British subjects as based on the com- 
mon law. The power of the Crown over the coinage was 
admitted as part of the royal prerogative. The law of con- 
tracts, including that of debt and tender as found in the 
English law, was recognized by them. 

i FROTHINOHAM, op. cit., pp. 104, 107, 131. 

*STORT, op. cit., 187, 188. 

* FBOTHXHOHAM, op. cit., p. 100, cites an interesting passage from an "Essay on 
OoTernment" published in the colonies in 1701. " It U a great unhappineas that no 
one can tell what is law and what U not in the plantations. Some hold that the law of 
England is chiefly to be respected, and when that is defectire the laws of the reepee- 
tire colonies are to take its place; others are of the opinion that the laws of the 
colonies an to take first place, and that the law of England is of force only wbeo 
they are silent. Others there are who contend for the laws of the eolonie* in eoa- 
juoction with those that were in force in England at the flrat settlement of the 

colony alleging that we are not bound to obserre any late acts of parliament 

except such only where the reason of the law U the same as in England," 


While they had brought over to the new country little 
money, they retained their English method of accounting, 1 
and "pounds," "shillings," "pence," and "farthings" re- 
mained the familiar terms of their currency. But while in 
England a system of barter had several centuries before given 
way to a money economy, in the rude conditions prevailing 
in the new world a return to this system of exchange was 
necessary. In the almost complete absence of coin, substi- 
tutes for money had to be found and their use regulated by 
law, in provisions prescribing the form in which taxes might 
be paid and the manner in which the obligation of debtor 
to creditor could be lawfully satisfied. These two classes 
of enactment were then often found together. From this 
necessity and the resulting legislation seems to have grown 
the doctrine that such medium only was a legal-tender as 
had had that quality expressly conferred upon it a doctrine 
which was applied later to coin, as well as to substitutes 
adopted temporarily as a means of meeting obligations which 
nominally imported the transfer of money units. 

These substitutes were of two main kinds: commodi- 
ties, varying with different communities of the new country, 
and bills of credit or notes issued by the governments of the 
separate colonies. Besides these media, Massachusetts boldly 
and in the face of the law attempted to have a mint and to 
provide a metallic currency of her own. An account of the 
experiment with each of these substitutes will now be given. 

It should be first noticed that the system referred to as 
one of barter was not such in the sense that goods were 
exchanged against goods, but certain commodities were 
accepted as the best substitute for a medium of exchange 

1 FELT, An Hittorical Account of Massachusetts Currency, p. 13. It will be 
recalled that at this time the English government was struggling with the difficul- 
ties of a greatly debased and also underrated silver currency, and consequent 
scarcity of silver in circulation. Hence one of the great objections to the departure 
of the colonists was the fear of their carrying coin out of the country. 


in the form of coin, and were estimated in terms of that 
coin; and on such commodities at the estimated rates was 
bestowed the legal-tender quality and the power of being 
receivable for taxes. 

The most conspicuous of these substitutes and the most 
universally adopted was the shell money of the Indians 
known as "wampum." 1 This might almost be said to have 
been the domestic medium of exchange, while skins of animals 
were used in transactions beyond seas.' But commodities 
having other uses than those of ornament were soon brought 
into service, and in 1631 what seems* to have been the first 
legal-tender law of the colonies was enacted by the governor 
and assistants of Massachusetts, 4 when corn was ordered to 
pass in payment of all debts at the usual market rate, unless 
money or beaver had been expressly named in the contract. 
A little later bullets & were ordered to be taken, being rated 
as equal each to a farthing, though no man was to be forced 
to take more than 12d. in any one payment in this form. In 
1643,' likewise in Massachusetts, wampum was given the 
debt-paying quality within the value of 40s. at the rate of 
four pieces 7 of black or eight pieces of white to a penny.* 

i This was known as " wampum," " wampnmpeag," or " peajr." It w of two 
kinds, black or dark blue, and white, the value of the dark being generally double 
that of the white. 

> WKEDON, Economic and Social Bator* of New England, Vol. I, p. SB. 

Virginia may have had an earlier one. 

HCTCHIJJSON, History of MauachutetU From the Pint Settlement Thereof, in 
XX, until the Year TIM (3d ed.), Vol. I, p. 76. 

March 4, 1635. PKLT, op. cit., p. 20. 

/6id., p. 28; POTTER, "Some Account of the Bills of Credit or Paper Moony of 
Rhode Island from the First Issue in 1710 to the Final Issue in 1786," Kkode lland 
Historical Track, No. 8, p. S. 

* 1n 1648 it was provided that the shells should be strung in lengths rspraseal- 
ing definite values. 

It is interesting to note that this currency was subject to the abuses from 
which metallic currency has always suffered. Massachusetts found it necessary in 
1646 to provide that to be a tender it must be "entire, free from deforming 
without breaches, and suitably strung. FBLT, op. cit.. p. 30; BBOXSOX. < 

f, p. 4. 


Similar legislation was enacted in Connecticut l and Rhode 
Island. 2 In Virginia and Maryland tobacco was the com- 
modity most universally desired, and so, in 1633, Virginia 
enacted that, while contracts, judgments, etc., should be reck- 
oned in English money, they should be paid in tobacco. 8 
And a century later Maryland made tobacco a legal tender 
at a penny a pound, and corn at twenty cents a bushel.* In 
North Carolina corn, pitch, tar, pork were also used at speci- 
fied rates. Thus, in 1715 any one of seventeen commodities 
named might be used as a legal tender or in payment of 
taxes. 5 Similarly in Pennsylvania, in 1719, it was proposed 
to make various kinds of produce a legal tender, and in 1722- 
23 a law was enacted making country produce at market prices 
pay for servants, for imported goods, and for the discharge 
of judgments and executions. 6 

Thus, in the earliest period of colonial development, the 
lack of metallic money was made good by the regulated use 
of commodoties on which was bestowed the debt-satisfying 
power at definite rates. 

At a later stage the foreign coins which came into circu- 
lation, though comparatively few in number, were regulated 
in value and could be used in the same way. Thus, Massa- 
chusetts as early as 1642, 7 and Connecticut 8 a little later, 
made the ducatoon of Holland lawful money at six shillings ; 
and in 1697, under the provincial government, the value of 
pieces of eight of Seville, Pillar, and Mexico were fixed at 

i BRONSON, op. cit., pp. 4, 7. 

i POTTER, op. cit., pp. 3, 15. 

RIPLEY, Financial History of Virginia, 1609-1776, p. 111. See HILDRETH, History 
of the United States, Vol. I, p. 214. 

* HICKCOX, A History of the Bills of Credit or paper money issued by New York 
from 1709-1789, p. 4. 

5 BULLOCK, Essays on the Monetary History of the United States, pp. 125, 126. 

PHILLIPS, Historical Sketches of the Currency of the American Colonies prior to 
the Adoption of the federal Constitution, pp. 12, 13. 

7 FELT, op. cit., p. 28. 8 BRONSON, op. cit., p. 14. 


the same value. 1 However, the colonial government was not 
given free play in this regulation of the currency in circula- 
tion. In 1703, in response to representations made by 
residents in the colonies, the home government assumed 
control, and the following year a proclamation was issued 
naming the value at which the various coins should circu- 
late.' As this proclamation was ineffectual ' it was followed 
in 1707 by an act of Parliament in more stringent terms, 
providing a penalty of fine and imprisonment for receiving 
or paying out coins named at rates other * than those therein 
pacified, although these differed from those assigned by the 
local* authorities. Whether or not this act of Parliament 
alone made these foreign coins a legal tender at the rate 
named is a question; but, whatever the result in law, in 
fact the proclamation and the act were disregarded. 

But the inadequacy of the supply of coin, together with 
the unsettled condition of affairs in England in the middle 
of the seven teeth century, had led Massachusetts to a project 
bordering on treason, if not actually amounting to it. It does 
not seem to have been denied that to establish a mint, as 
was then proposed, and to exercise the power to coin money 
was the assumption of a portion of the royal prerogative. 
The plan seems to have been undertaken with the idea 
that the home government was then too weak to interfere. 
Such a scheme had been elaborated in Virginia some 
years* before, but had been abandoned, probably because 
of the illegality of the plan; it was, however, carried 

1 Sea DAVIS, Currency and Banking in the Province of the Mauacktuett* Baf, 
p. 98 (Publications of the American Economic Association, Dec., 1900). The reference 
to this act presents an opportunity for expression of acknowledgment and apprecia- 
tion of Mr. Daris's contribution to a field hitherto incompletely corered. 

The ralaes assigned were based on a computation by Sir Isaac Newton, and 
were in terms of New England money. FELT, op. cit., pp. SB, SB. See HICECOI. op. ctt. 
pp. 10, 12, for effect in New York. 

* It seems to hare been wholly disregarded in the colonies. 
Cited by BEOXSOM, op. cit., p. 28. 

/. e.. Provincial. RlFLET. op. cit., p. 110. 


out in Massachusetts, and in 1651 a mint was erected. 
The currency issued from this mint was appointed to be 
less valuable by " two pence in the shilling " than English 
coin, in the hope of thus preventing its exportation. It 
was likewise enacted that the money thus provided should 
be the only "current" money of the commonwealth except 
English. 1 

The establishment and continuance of the mint was the 
object of jealous notice on the part of the home govern- 
ment, and was one of the causes of the revocation of the 
colonial charter. 2 This, of course, resulted in the enforced 
termination of its operations, and with the closing of the 
mint plans began to be suggested for the use of the colony's 
credit to supply the deficiency in metallic money 3 a method 
followed sooner or later, with disastrous results, by each of 
the colonies. 

This is not the place for a description of each of these 
experiments; yet an account of the first issue of bills which 
were made a legal tender by an American colony may not 
be out of place. 

Massachusetts was induced to take this step by the 
critical situation brought about by the expedition against the 
French and Indians undertaken in connection with New 

i FELT, op. cit., pp. 31, 33, 41 ; DAVIS, op. cit., p. 25. In the chapter here referred 
to Mr. Davis explains the effect of the mint on the policy of the home government, 
and also shows the difference between " proclamation money " and " lawful money " 
in Massachusetts a distinction which may be applied in the other colonies. 

* FELT, op. cit., pp. 43, 48. 

3 As early as 1652 a proposition had been made for an issue of paper money in 
Massachusetts (Ibid., p. 33), and in 1685, when the overthrow of the mint by the home 
authorities was seen to be inevitable, this plan was revived, and authority to estab- 
lish a " bank " similar to one which had been formed in London two years before 
was granted by the president of the colony to " one John Blackwell, Esq., of Boston, 
with divers others " (Ibid., p. 46). The persons named were empowered, because 
of the scarcity of coin, the need of meeting the king's revenue, etc., to issue bills on 
credit (a term already interchangeable with "bank bills" in England, STORY, op. 
cit., g 1362, n. 4) given by persons of estate and known integrity and reputation, 
" which may passe with greater ease and security in all payments of twenty shill- 
ings or over than monies coined." This organization got no farther than the striking 
off of bills. DAVIS, op. cit., p. 7. 


York, Plymouth, Connecticut, and Maryland An attack 
made on Schenectady 1 by these foes on February 8, 1690, 
had led to a conference on the part of the colonies, 
and to an unsuccessful expedition, the expenses of which 
were to be met by the issue of 7,000 in bills of credit 
These were at first not made a legal tender, but were 
receivable in all public payments. 1 All efforts were made to 
maintain these bills at par. Patriotic men exchanged gold for 
them, and legislation was enacted declaring that the amount 
issued would be limited. They speedily depreciated, how- 
ever, and two years later (1692) it was enacted that they 
should be a legal tender, "pass current within this province 
in all payments equivalent to money," and that they should 
in public payments pass at an advance of 5 per cent. This 
bonus of 5 per cent was allowed as often as they were 
brought to the treasury ; and, thus supported, they were main- 
tained at par for twenty years.' Issues followed in 1702,* 
1709,* and 1711.* Up to the time of these last issues confi- 
dence in the paper of the colony had been maintained. 
Not only had the bills been a legal tender, but provision 
had been made for their redemption at an early date; 1 

i FROTHINOHAM, op. cit., chap. 3. 

>FKLT, op. cit., pp. 50, 52. General reference to DAVIS, op. eit., is made. The 
form of this first American paper money may be interesting. "No. 2161. 10s. 
This indented bill of ten shillings due from the Mass, colony to the Possessor, 
shall be in value equal to money, and shall be accordingly accepted by the Treas- 
urer, and receivers subordinate to him, in all public payments, and for any stock 
at any time in the treasury. Boston, in New England, December 10, 1000. By order 
of the General Court [Signed by committee]." 

* Ibid., p. 52, These were known as "old charter bills." The taxes for which 
these bills were receivable amounted in ten years to about 11,000, and it is calcu- 
lated that the issues and reissues of bills daring this period amounted to more 
than 110,000. 

< 10,000. Safeguarded by provision for their redemption, and by a resolution 
to issue the old bills no more. There was a special tax laid to redeem these bills. 
/6id.. p. 57. 

* 30,000, to defray expenses of an expedition against Canada. The boss* govern- 
ment had promised its pecuniary aid in the undertaking. Ibid,, p. 65. 

* Ibid., p. 03. 

1 0ne or two years. Ibid. 


but from 1707 the collection of the taxes imposed for the 
redemption of the bills had been postponed, so that the faith 
of the people in their ultimate redemption had been shaken. 1 
At this time, too, the other colonies resorted to similar 
measures, 2 and there was such enormous increase in the 
volume of these notes in circulation as to induce a spirit of 
irresponsibility by its very excess. By 1712 the notes had 
so depreciated that attempts were made to bolster them by 
enforcing or calling attention to their legal-tender quality. 
The notes of the first issue had been legal tender since 1692, 
those of other issues from the time of putting them forth, 
but it was in 1712 3 expressly re-enacted that, with the excep- 
tion of specialties, 4 they should be a full legal tender. This 
legislation was supplemented by legislation abbreviating the 
statutory duration of debts. 5 The bills of each colony were a 
full legal tender only in the colony issuing them. 8 Neverthe- 
less they gained currency in the other colonies, 7 and from 1712 
to 1749 there was what amounted to a single paper currency 
throughout New England, subject to a more or less uniform 

1 DATIS, op. cit., p. 89. 

2 Connecticut issued 8,000 in June, 1709. These bills were to be paid out as 
equivalent to money, and were receivable at an advance of 5 per cent, for taxes. 
New Hampshire issued 3,000 this same year on the same terms. BULLOCK, op. cit., 
p. 207. Rhode Island issued 5,000 in May, 1710. POTTEK, op. cit., p. 7. 

3 /bid., p. 65. DAVIS describes this as a quasi-legal tender, in that execution 
was stayed by the tender. Op. cit., p. 99. 

* "Specialty" is a contract entered into with certain formalities of writing, 
signing, and sealing. BOUVIEB, Law Dictionary, Vol. II, p. 537. 

s DAVIS, op. cit., p. 102. 

6 See BBONBOV, op. cit., p. 30, for Connecticut legislation making her bills a 
tender. Also POTTER, op. cit., p. 11, for same in Rhode Island. BULLOCK, op. cit., p. 
222, for New Hampshire. 

? An idea of the situation can be got from the fact that, of the 440,000 of 
Rhode Island paper in circulation, 350,000 was circulating in Massachusetts, and 
50,000 in Connecticut, being of course legal tender in neither place. In connection 
with the effort, the governor makes the interesting claim that making bills should 
be classed with coining money as part of the royal prerogative. FELT, op. cit., p. 115. 
It may also be noted that there were in circulation 710,000 of private paper which, 
though not legal tender, circulated at 33 per cent, advance of the colonial bills, and 
120,000 of other private paper not a legal tender which circulated at par. Ibid., 
p. 107. 


rate of depreciation, 1 consisting of notes promising, on the 
part of the various colonial governments, to accept them in 
payment of taxes to a specified amount, because declared 
equal in value to money. 1 

New York, too, had in 1709 joined the procession of 
those who followed after paper issues. Her first notes, how. 
ever, were not made a legal tender until 1713, and then the 
provision applied to subsequent contracts only.' These 
notes, however, and those of Pennsylvania ten years later, 4 
seem to have been kept at par. They were not only legal 
tender, as were the New England bills, but they were safe- 
guarded by provisions for their redemption. Indeed, the 
New York bills circulated in New England 1 at an advance 
of from 25 to 35 per cent, over those of the New England 

As issue had followed issue, and, in spite of legal-tender 

1 Massachusetts prohibited the circulation of the bills of the other colon in* within 
her limits (1735), bat was of coarse unable to enforce her prohibition. BCLLOCE, op. 
cit., p. 209. Connecticut recognized this condition by making the bills of MaMa- 
chusctts, Connecticut, New York, and New Hampshire receivable for her taxes ; and 
the same thing most often have been done in the other colonies without expreM 
authorisation. BRONSON, op. cit., pp. 40, 53. The scale of depreciation was: 

In 1710 an ounce of silver was worth fts. in colonial bills. 

In 1721 an ounce of silver was worth 12s. in colonial bills. 

In 1724 an ounce of silver was worth 15s. in colonial bills. 

In 1729 an ounce of silver was worth 184s. in colonial bills. 

In 1739 an ounce of silver was worth 26s. in colonial bills. 

In 1742 an ounce of silver was worth 28s. in colonial bills. 

In 1744 an ounce of silver was worth 32s. in colonial bills. 

* The following is the wording of a Massachusetts bill of 1737 : 

"This bill of TWENTY SHILLINGS due from the Province of Massachusetts Bay in 
New England, to the possessor thereof, shall be in value equal to three ounces 
of coined silver, Troy weight, of sterling alloy, or gold coin at the rate of eighteen 
shillings per ounce ; and shall be accordingly accepted by the Treasurer and receivers 
subordinate to him in all payments (the duties of Imports and Tannage of ship- 
ping and incomes of the Light House only excepted) and for any Stock at any Una 
in the Treasury. "BOSTOM. By order of the Great and 1 ! 

"Court or Assembly." 

The excepted duties were in this case to be paid in specie, and these receipts were 
to be used in redeeming the notes. FELT, op. cit., p. 92. 

* HICKOOX, op. cit., pp. 16-20. PaiLLirs, op. cit, pp. 12, IX 

Where, of course, they were not a legal tender. 

HICECOX, op. cit.. p. 20. 


provisions, depreciation had overtaken the notes ; it became 
necessary in 1727 * in Massachusetts to regulate the rates at 
which the notes of the various issues should be taken. In 
spite of this legislation it seemed worth while to follow this 
by a stringent tender law in 1731. 2 In January, 1742, 
further modification was found necessary; 3 it was then 
provided that silver should be valued at 6s. 8d. the ounce, and 
that all bills afterward emitted should be estimated at that rate. 
All debts contracted within the next five years, special con- 
tracts excepted, were to be payable in such bills; but if 
depreciation should occur, due allowance was to be made. 
Connecticut enacted a similar law the following year. 4 The 
result of this legislation was that debtors entered into con- 
tracts expecting to pay bills, while creditors, when the bills 
depreciated, demanded specie; and in 1742 it was found 
necessary to enact that only those creditors who had loaned 
it should demand specie. 5 

Too much space, perhaps, has been given to this form of 
substitute for a metallic currency adopted in the American 
colonies. From the illustrations given it is clear that in the 
New England colonies, from the time at which bills had first 
been issued in large sums and at frequent intervals, they 
had depreciated in value in spite of provisions making them 
a legal tender and in spite of their being receivable 8 for 
public dues. It was not unnatural, then, that the attention 
of the home government should be called to the subject and 
restraining legislation enacted. The initiative came from 

1 For bills issued before 1710 and in that and the following year 8s. were to be 
taken as equal to an ounce of silver ; those of 1712 and 1713 at 8s. 6d. ; of 1714 and 1715 at 
9s. ; those of 1716 and 1717 at 10s. ; those of 1718 at 11s. ; those of 1719 and 1720 at 12s. ; those 
of 1721 at 13s. ; of 1722 at 14s. ; of 1723 at 15s. ; issues since 1723 at 17s. That is, the last 
issued were less valuable by 53 per cent, than the earlier ones. FELT, op. cit., p. 83. 

3 Ibid., p. 86. 

3 Ibid., p. 111. This was known as the " Equity Bill." DAVIS, op. cit., pp. 156, 189. 

* BRONSON, op. cit., p. 62. s FELT, op. cit., p. 116; DAVIS, op. cit., p. 174. 

With some exceptions. See above, p. 58, n. 3. DAVIS, op. cit., p. 172, well 
describes the hopeless confusion existing during the decade 1740-50. 


London merchants who felt themselves defrauded by the 
tender acts in the colonies and saw no prospect of improved 
conditions there. Already, in 1739, the House of Commons 
bad asked the Privy Council to demand reports from each 
of the colonies as to the amounts of bills of credit issued 
and redeemed since 1700,' and such reports had been ren- 
dered. And in 1748 the matter was again taken up. There 
seems to have been only one proposition made, and that was 
to prohibit legislation on the part of the colonies making 
their bills a legal tender. On February 15, 1749, a bill was 
introduced in the House of Commons "to regulate and 
restrain paper bills of credit in the British colonies and 
plantations in America, and to prevent the same being legal 
tender in payments for money." This bill contained an 
absolute prohibition on the issue of any bills of any kind or 
denomination without the king's license; it also provided 
for the subjection of the colonies to such orders and instruc- 
tions as should be transmitted to them by the Crown ; and it 
applied to all colonies alike. For these reasons it aroused 
great opposition, inasmuch as some of the colonies, as Mas- 
sachusetts, were honestly endeavoring to meet the situation, 
and indeed had met it successfully, while some had never 
allowed themselves such excesses as had marked the course 
of others. Massachusetts, Rhode Island, Connecticut, Penn- 
sylvania, South Carolina, and New York sent representatives 
to appear before the committee of the House of Commons 
and present their arguments* against the proposed legisla- 
tion, and the whole question was finally laid over until the 
next session in order to obtain fuller information. 

In 1751* the bill in an amended form was passed. It 
applied to the New England colonies only and contained three 

> Journal of Home of Common*. Vol. XXIII, p. 379. 

iTheee were largely constitutional in character, based on the claim thai foeh 
legislation violated the charter pmileges of the oolooiea.- Ibid., Vol. XXV, pp. US, 
811, 818, 882. 

COBBCTT. Parliamentary Huiory, VoL XIV. p. 960; Statute* at Lory* Vol. TX, 
p.5W;Z4GeorireII.,c.53; DAVIS, op. cit. pp. ZMf. 


provisions : (1) The governors should assent to no acts for the 
emission of bills. This would affect only Massachusetts and 
New Hampshire, as the governors of Rhode Island and Con- 
necticut had no veto. (2) All outstanding bills were to be 
called in. (3) Such bills as might be allowed e. g., sums 
issued for the current expenses of the colony, for which 
provision for calling in was made, or sums issued in cases 
of extraordinary emergency, as war, with the consent of the 
home government should not be a legal tender. This meas- 
ure was to take effect September 29, 1751. 

It should be said, in fairness to the colonies, that Massa- 
chusetts had already provided for the calling in and redemp- 
tion of her bills. An effort had been made to persuade the 
other colonies to agree upon a scheme of redemption. Fail- 
ing at first in this, it was determined to take advantage of 
the special circumstances growing out of the expedition 
against Cape Breton, which had been undertaken with sur- 
prising success by the New England colonies in 1745, under 
the encouragement of the mother country. It had been 
understood that England would defray the expense of that 
expedition, and when such proved to be the case, and Massa- 
chusetts learned that she was to receive the sum of 183,699 
2s. 7^d. in specie as equivalent to the part of the pecuniary 
burden she had borne (she had emitted 261,700 on February 
14, 1745, to defray the expense), after some hesitation it was 
determined to use this special providential aid to put the 
currency on a better basis than ever. And so, January 26, 
1749, an act was passed with this result in view. 1 Connecti- 

i FELT, op. cit., pp. 115, 121. A piece of eight (a dollar), estimated as worth 4s. 
6d. in English money, was to be given for 45s. in bills of "old tenor" (i. e., those 
issued before February 4, 1737), or for 11s. 3d. of bills of middle (i. e., those issued 
between this date and March 4, 1740) and new tenor (i. e., those issued after March 4, 
1740) . All bills were to be irredeemable after March 31, 1752. The process of redemp- 
tion was to be concluded by March 31, 1749. All debts and contracts entered into 
after the time fixed for calling in the notes were to be payable in coin, estimating 
silver at 6s. 8d. the ounce. The deficit left after using the remittance from England 
was to be made up by a tax, and the passing of the paper of the neighboring colo- 
nies was made a misdemeanor. 


cut was preparing to take the same step. 1 The act of Par- 
liament was called forth perhaps chiefly by the condition of 
affairs in Rhode Island,' where a large issue of notes was 
about to be emitted. 

From the date of this act there was a stable paper cur- 
rency in the New England colonies. The metallic money 
was still small in amount; but the colonial governments 
issued certificates of indebtedness bearing interest and pay- 
able at the end of a year. Resort was had to heavy taxation in 
order to maintain them at par, and they constituted a consid- 
erable part of the circulating medium up to the time of the 
War of the Revolution. 1 

The act of Parliament cited did not, as was said, refer to 
the colonies outside of New England. Up to that time those 
colonies had given no provocation for such restraining legis- 
lation ; but after the campaign which ended in Braddock's 
defeat (1756) their policy with regard to their notes became 
uncontrolled, and in 1764 the act of 1751 was extended to all 
the American colonies. 4 

The legal-tender quality about this time was bestowed 

i BRONSON, op. cit., pp. 68, 70. 

iThe share of Rhode Island was only about 7,800 of specie, as against 183.618 
which Massachusetts had receded. POTTER, op. cit., p. 06. 

* These were known as "province notes," and were treasury note* of the follow- 
ing form : " Received of .... the sum of .... for the use and service of the 
Province of Massachusetts Bay, and in behalf of said province I do hereby promts* 
and oblige myself and successors in the office of Treasurer to repay this aid .... 
or order on or before the 10th day of June, 1758, the aforesaid sum of .... in coined 
silver of sterling alloy at 6s. 8d. per ounce, or in Spanish milled dollars of full 
weight at As. each, with interest annually at the rate of 6 per cent, per annum " 
(FELT, op. cit., pp. 131, 141); or "The possessor of this bill shall be paid by the 
Treasurer of the colony of Rhode Island .... lawful money at the rate of W. W. 
the ounce of silver within two years from date. By order of the Assembly the J7th 
of February, 1756" (POTTER, op. cit., p. 95). See BOLLOCK, op. oil., p. 252, for New 
Hampshire, and BRONSON, op. cit., p. 74, for Connecticut. 

PHILLIPS, op. cit., pp. 25, 196; HICKCOZ, op. cit.. p. 42t 4 OROROR III., c. 34. 
The bill was entitled " An act to prevent paper bills of credit hereafter to be lamed 
in any of His Majesty's colonies or plantations in America from bring declared to 
be a legal tender in payment of money, and to prevent the legal u>ndr of such bills 
as are now existing from being prolonged beyond the period limited for calling In 
and sinking the same." 


upon gold coin by several of the colonies. The expediency 
of doing so had been discussed in Massachusetts in 1752, and 
a law to that effect was enacted ten years later. 1 Rhode Island, 
in 1763, declared that for that colony only gold and silver coin 
should be lawful money, in terms of which accounts should 
be kept and debts discharged. 2 In New York a bill was 
passed giving to certain gold coins at the rates at which they 
were then current this power; but it was vetoed because 
it was thought to be in conflict with the act of 1707, by 
which the value of those coins in the colonies had been 
fixed. 3 

If the questions with which the inquiry began be recalled, 
it appears: (a) As to the agent by whom the power was 
bestowed, that one of the earliest forms of activity of the 
colonial authorities was the regulation of commodities in 
which debts might be adjusted. 4 This power was exercised 
subject to control by the home government, and on two 
notable occasions Parliament interfered with the exercise of 
the power: once (1707) attempting to overrule colonial legis- 
lation as to the value of coins in circulation, once prohibit- 
ing the abuses of the credit of the colonies in the form of 
excessive issues of bills of credit (1751 and 1764). 5 (6) The 
power was exercised with respect to commodities at fixed 
prices, foreign coins, locally minted silver coins, bills of the 
respective colonies, and finally gold coin at definite values. 
The reasons underlying these acts seem simple enough. 
They were, first, such a lack of a medium of exchange as is 
apt to exist in any primitive community, and, second, the 

1 Gold was rated at 2>/id. the grain. See FELT. op. cit., pp. 136, 147. 

2 POTTBE, op. cit., p. 94. 3 HiCKCOX, op. cit., pp. 46, 50. 

* Professor Sumner points out in The Finances and Financier of the Revolution, 
Vol. I, p. 12, that the settlement of controversies at law and the adjustment of debts 
was one of the very few functions performed by the authorities of the colonies in the 
earlier period of their development. 

5 Mr. Davis exhibits with delightful clearness the relation of the controversies 
over these matters to the growth of the revolutionary spirit. Op. cit., pp. 393 f. 


lack of a stable standard of value. This was the period 
daring which the English standard was undergoing a change. 
It has been pointed out 1 that during this period the silver 
coins of England had been in a deplorable state, and the 
great recoinage had failed to meet the difficulties of the situa- 
tion. The end of the period here considered coincides with 
the date at which the change of the English standard 
acknowledged in the legislation of 1774. 

i Above, pp. 44,42. 


Continental Bills of Credit Bills Issued by the States after the Revo- 

ON May 10, 1775, the Continental Congress assembled in 
Philadelphia. The most troublesome question which it faced 
was that of gathering together the resources with which to 
prosecute the war soon seen to be inevitable. All was con- 
fusion. The treasuries of the colonies were almost empty. 
Both loans and taxes seemed impossible. No one would 
lend to the new government yet so feeble, and the citizens 
of the various colonies were in no frame of mind to submit 
to heavy taxation. 1 

It was but natural that resort should be had to the finan- 
cial method so familiar to the colonists, the issue of bills of 
credit. It was proposed that Congress should issue such 
bills, making the colonies, now states, responsible for their 
redemption. In this way Congress would be given the 
means "of making such expenditures as they saw fit, with- 
out asking the previous consent of the states," 2 and yet the 
states would be bound to meet those expenditures by taxa- 
tion in order to redeem the notes. This plan was not 
adopted without great hesitation, extended discussion, and 
considerable pressure; but it was finally adopted, and May 
10, 1775, Congress resolved to emit bills equivalent to two 
million Spanish milled dollars, pledging for their redemp- 
tion the faith of the twelve colonies. 3 The hope that the 

1 On this, see Professor Sumner's interesting discussion, The Finances and the 
Financier of the Revolution, Vol. I, p. 11. 2 Ibid., p. 41. 

3 Georgia was not represented. These bills were to be in denominations from 

one to twenty dollars, and in the following form : " Continental currency. No 

" This will entitle the bearer to receive .... Spanish milled dollars, or the value 
thereof in gold or silver, according to the resolution of Congress, held at Philadel- 
phia on May 10, 1775." PHILLIPS, op. cit., Vol. II, p. 4. The act regulating the 
issue was passed July 29. Journals of Congress, Vol. I, pp. 117, 174. 



colonies would proceed to lay taxes for their redemption of 
the notes was far from being fulfilled; they rather proceeded 
to emit bills of their own. 1 But they resorted to other 
methods supposed to be efficacious in supporting the credit 
of the notes of Congress. Massachusetts, as early as June 
28, 1775, resolved* that the bills of all the colonies' should 
be within its jurisdiction a tender in payment of all debts 
and damages on contracts, and receivable at the public 
treasury, etc.; and if any one should refuse the notes, or 
demand a premium for receiving them, he should be deemed 
an enemy of the country. 4 In August, Rhode Island adopted 
the same method in behalf of the Continental bills, made 
them a legal tender in payment of all debts,* and declared 
that any person who should refuse such money ought to be 
considered an enemy to the credit, reputation, and happiness 
of the colonies and destitute of the regard and obligation he 
was under to his country, etc.* 

It is not intended here to give an account of the various 
issues of the Continental government It is only necessary 
to point out that during this period these issues of the Con- 
tinental Congress were made a legal tender only by the indi- 
vidual states, though on the recommendation of Congress. 7 

In the same way, when the depreciation had become so 
great that repudiation, which had been regarded as an impos- 
sible breach of faith, was seen to be inevitable, on the 

I Massachusetts, May 20, 1775; Rhode Island in May and June, 1775; New York, 
December, 1775; etc. SUMNKR, op. cil.. Vol. I, pp. 45-7. 

i Through the Provincial Congress, then the legislative body. 

* Canada and Nova Scotia ezcepted. 

SuKKKK, op. cit.. Vol. I, p. 45. * PHILLIPS, op. eit.. Vol. II. p. 30. 

Similar legislation was enacted by New Hampshire, January. 1777, (BVLtxxm. 
op. cit., p. 864) ; by Virginia, July, 1776 ( PHILLI M, op. cit.. Vol. II. p. 145) j by New 
Jersey, August, 1776 (Ibid., Vol. I, p. TO) ; by Massachusetts, December 3, 177S (PBLT. 
op. fit., p. 174). 

'January 14, 1777. (Journal* of Conffrem, Vol. HI. p. 20.) "Jtoohud that 

it be recommended to the legislatures of the United 8taUs to pas laws to make UM 
bills of credit issued by the Congress a lawful tender in public and private debts aad 
a refusal thereof an extinguishment of such debts." 


recommendation of Congress the states revised their laws 
making continental bills a tender. 1 

By the Declaration of Independence the colonies were 
asserted to be "free and independent" states; by the sec- 
ond of the Articles of Confederation 2 it was declared that 
"each state retains its sovereignty, freedom, and independ- 
ence, and every power not .... expressly delegated to the 
United States in Congress assembled." To Congress was 
expressly granted, in Article IX, the sole and exclusive power 
of regulating the alloy and value of coin struck by their own 
authority or by that of the respective states, together with 
concurrent power to borrow money or emit bills, those bills 
being based on the credit of the United States. 3 If an 
interpretation of the extent of these grants of power is to 
be found in the method of exercising the power bestowed, 
it may be said that the power to make bills a legal tender 
was not one of the powers granted, but was among those 
elements of sovereignty retained by the individual states. 
"Under the articles of confederation, Congress did not, per- 
haps could not," * and certainly thought they could not, make 
bills of credit a legal tender. 

It was a power freely exercised by the states during the 

1 March 20, 1780. Journals of Congress, Vol. VI, p. 48. The story of the excessive 
issues by Congress and by the states, of the measures resorted to to sustain them 
by regulation of prices, etc., is a familiar one, told in many places, and need not be 
retold here. Legislation in accordance with this recommendation was enacted in 
New Jersey on January 5, 1782 (PHILLIPS, op. cit., Vol. II, p. 181) ; in Virginia, Novem- 
ber, 1780 (Ibid., Vol. I, p. 302) ; in Massachusetts, July 5, 1781 (FELT, op. cit., p. 194) ; in 
Rhode Island, June, 1780 (POTTER, op. cit., p. 113) ; and in the other states at about the 
same time. These bills had fallen about 500 for 1 (ScMNEB, op. cit., Vol. I, p. 95), and 
when on January 7, 1783, a resolution was offered in Congress for their redemption 
at the rate of 40 to 1, or 75 to 1, it was voted down on the ground that to pay any of 
the past debts would require " so heavy deduction from the greatest revenue that 
can be raised as would totally obstruct all present service " ( Journals of Congress, 
Vol. VIII, p. 64). 

2 Drawn up in 1778; finally ratified by all the states in 1781. Ibid., Vol. VII, 
p. 48. 

3 The consent of nine states being necessary to any one of these acts. 
< Marshall, C. J., in Craig v. Missouri, 4 Peters, 410. 


ensuing decade; for, toward the close of the Revolution, in 
each state there arose a paper-money party, which tried to 
force on the community a repetition of the experiment so 
disastrously worked out during the war. Rhode Island, New 
York, New Jersey, Pennsylvania, North Carolina, South 
Carolina, and Georgia issued bills during this decade, for 
the redemption of which inadequate provision was made. 1 
In each case the legal-tender quality was bestowed and often 
there were most stringent police measures enacted, in the 
hope of sustaining by their aid the value of the bills. Some 
illustrations may be cited: 

As late as 1781 Pennsylvania emitted 500,000 of bills 
of credit protected by the most violent penalties. The 
protest of the minority against whose vote these laws were 
passed is interesting. Eighteen members of the Assembly 
protested against this action, on the grounds that tender 
acts were futile; that penalties in such cases were always 
either unnecessary or unjust; that such legislation showed 
lack of confidence and helped defeat its own aims; that it 
was an interference with the rights of private property ; that 
it results in dishonesty and idleness; that it sanctions the 
violation of contract; that it identifies the depreciation of 
bills with the interest of debtors; and, finally, that such 
legislation was directly opposed to the recommendations of 
Congress. 2 

North Carolina went to the extreme in this direction. 
By 1783 the paper currency which she had issued at various 
times in great quantities had disappeared from circulation, 
and the state was on a specie basis for the first time in 
seventy years. But there was agitation for renewed issues, 
and in this year the legislature was to issue 250,000, 
full legal-tender paper. A tax was levied for their redemp- 

i LIBBT, Distribution of the Vote on the Federal Court tatam, chap. UL 
* PHILLIP*, op. cit.. Vol. II, p. 180. 


tion, and the property which had been confiscated by the 
state was pledged for its security; but the property was 
devoted to other uses, the tax was inadequate, and the paper 
depreciated, only to lead to further issues in 1786, to re- 
peated depreciation, to speculation and loss. 1 

The issue in Rhode Island was perhaps most interesting, 
because it led to a conflict between the legislative and 
judiciary departments and gave rise to a decision of court 
nullifying an act of the legislature. In November, 1782, 
the difficulties growing out of the issues of the war had 
been finally settled by an act funding the outstanding notes. 
But in 1786, after a fierce political fight, the paper-money 
party again gained the ascendancy in the state, and an issue 
of $100,000 was authorized to be loaned at 4 per cent, for 
seven years, after which period one-seventh was to be pay- 
able annually. These bills were a legal tender for all debts 
except those due to charitable corporations, even if arising 
out of contracts made prior to the passage of the law. A 
description of the act and its consequences may be cited: 

"The law not only created a bank of issue of money, but 
acted as a general liquidation law. If a creditor refused to 
receive the bills in payment of his claim, the debtor made 
immediate application to a justice either of the superior 
court or the court of common pleas, who issued a citation 
to the creditor to appear at his dwelling-house in ten days 
and receive the money as prescribed by law. The judge 
then issued a certificate of the facts to the debtor, and in 
case the creditor failed or refused to call for the money 
within the specified time advertised the facts in the news- 
papers three weeks, and the debtor was discharged of his 

During the following month, June, 1786, another act was 
passed subjecting such as should refuse the bills to a penalty 

i BULLOCK, op. cit., pp. 193, 194. 


of 100; and in August still a third act reduced the pen- 
al t i.-s. but attached to the procedure more hateful feature* 
than before. Among these was the provision for the trial 
of the case "without jury, but according to the law of the 
land. 1 ' It was on the ground of the denial of the right to 
trial by jury that the judges refused to take cognizance of 
the act, and substantially declared it unconstitutional and 
so void. The law making these bills a legal tender was not 
repealed, however, until 1789. 1 

The effect of these actions on the part of the states 
named is written in clear terms in the prohibition on the 
states found in the constitution of the United States. 1 

By the Articles of Confederation the Congress was given 
express and exclusive power to regulate the alloy and 
value of coin struck by their own authority or by that of 
the respective states. In accordance with this power, in 
1782 the superintendent of finance, Robert Morris,' was 
instructed to report a table of rates at which foreign coins 
should circulate in the United States 4 and a plan for estab- 
lishing and conducting a mint.' In his reply he set forth rea- 
sons for establishing a uniform coinage in the country. He 
said the ideas conveyed by the monetary terms were almost 
as various as the states themselves. Commonest transactions 
were intricate and difficult. He advocated the provision of 
a money which would be a just legal tender.' 

i POTTER, op. ctt., pp. 118, 131; THATKB, Con*tit\Uio*al COM, p. 7*; Coxc, 
Judicial Power and Unconstitutional LepMation, p. 235; HcMxrru, UMorg ofUu 
United State* Vol. I, p. 339. 

J Art. 1, 10, 1. 

*Th0 Board of Treasury, which had ex ecu tod the financial policy coder the 
direction of Congress during the war, was replaced by this offleer February 
7, 1781, and to him was intrusted various and comprehensive power*. Jtmrmat* of 
Conerett, Vol. VII, p. 29. This officer was again replaced by a board. May S. UU. 
Ibid., Vol. IX, p. 182. See also VoL VII, p. 38, for Morris's election. 

Ibid., VoL VD. p. 202. Ibid., p. 28ft. 

American State Papers, Vol. V. p. 101. Speaking of the need of uniformity in 
coins, as in weights and measures, he says : " Another inconvenience which admits 
of the same easy remedy is the want of a legal tender. This is as neeeary for the 


'Two years later Congress referred this report to a com- 
mittee of which Jefferson was a member, 1 and he 2 proposed 
the dollar as the unit, with divisions and multiples in decimal 
ratio. 8 The following year* Jefferson's plan was adopted by 
Congress. The unit thus adopted 5 was the Spanish milled 
dollar, containing 385.72 grains of fine silver and 31.75 
grains of alloy. 6 

purposes of jurisprudence as a judicial currency for those of commerce. For, 
although there is great impropriety, not to say injustice, in compelling a man to 
receive part of his debt in discharge of the whole, yet it is both just and proper that 
the law should protect the honest debtor who is willing to pay against the oppressive 
creditor who refuses to receive the full value." He favored the adoption of the 
single silver standard, the assumption of the expense of coining by the public. He 
suggested a most ingenious method of arriving at a new standard which would 
introduce harmony instead of added difficulty to the systems of the different states. 
His plan was to find a common divisor of the sums at which the Spanish dollar 
passed in the various states. The dollar was, in Georgia, equal to 5s., in North Caro- 
lina and New York to 8s., in Virginia and the New England states to 6s., in South 
Carolina to 32s. 6d., and in the other states to 7s. 6d. The fourteen hundred and 
fortieth (1/1440) part of the dollar would agree with all these values except that of 
South Carolina, i. e.,be contained in them without a remainder. This he advocated 
as the unit of value. The application of his reasoning may be illustrated. Twenty- 
four of these units would equal a penny in Georgia ; fifteen a penny in North Caro- 
lina and New York ; twenty a penny in Virginia and New England ; sixteen a penny 
in all the other states except South Carolina, where thirteen pence would be equal to 
forty-eight of the proposed coinage. He did not advocate the coinage of the proposed 
unit, but only of multiples thereof. He suggested two copper coins, one equal to eight 
and the other to five units. The lowest silver coin would be 100 units, equal to 25 
grains of fine silver; coins equal to 500 units and to 1,000 units were also suggested. 
SDMNEE, op. cit., Vol. II, p. 36. See MCMASTER, op. cit., Vol. I, pp. 196-200. 

1 Writings of Jefferson, edited by Paul Leicester Ford, Vol. I, p. 73. 

2 Finding the " general views of the financier sound, but the unit too minute for 
ordinary purposes." 

s Ibid., Vol. Ill, p. 446. Jefferson submitted his plan to Morris, who adhered to 
his own scheme, only agreeing that there should be taken as the unit iWo of the 
dollar, which he called a " cent." 

^ 1784. American State Papers, Vol. V, p. 105. 

6 Journals of Congress, Vol. X, p. 157. 

Ibid., Vol. XI, p. 129. On August 8, 1786, it was further determined (1) that the 
standard of fineness for the United States should be eleven parts fine to one part of 
alloy ; (2) that the money unit of the United States which was, by the resolve of July 6, 
1785, a dollar, should contain 375.64 grains fine silver ; (3) that the money of account 
to correspond with the division of coins, agreeably to this former resolve, should 
proceed in a decimal ratio. The unit of value thus adopted differed from that des- 
ignated in the resolution of July 6 by 254 per cent. The coins proposed were the 
mill = .001 ; the cent (the highest copper piece)= .01 ; the dime (lowest silver piece) 
= .10 ; the dollar (highest silver coin) - 1.00. There were to be coined the half-dollar 
(silver), the quarter-dollar, and dime, containing proportional amounts of silver, 
and the cent and half cent, in copper. There were to be two gold coins, the eagle 
= 246,268 grains of fine gold ($10), and the half-eagle. 


The issue of copper coins was also provided for, and it 
was declared that they should be receivable in all taxes and 
payments due the United States in the proportion of $5 
in every $100 paid The value of the copper coins of the 
states was regulated and the currency of all foreign copper 
coin was prohibited throughout the United States. 1 

i The establishneent of a mint was prorided for by a renolntion of October 16, 
1788 (Jcmrnalt of Cbnpren, Vol. XI, p. 1M), bat wu of ooane not carried into effect 
until after the adoption of the constitution. See below, p. 91. 


The Convention of 1787 The Ratifying Conventions Interpretation. 

IN connection with the constitutional convention of 1787 
there are two subjects with which a discussion of the consti- 
tutional aspect of the legal-tender quality of money bestowed 
by the constitution and that of the borrowing power may be 
connected: the extent of the coinage power, together with 
prohibitions of the exercise of these powers laid on the states. 
As the debates are brief and there is no sharp line drawn in 
them between these subjects, the whole discussion will be 
given together. 

With the memory of the experiences connected with the 
continental currency and the paper-money issues of the 
states fresh in their minds, the members of the constitutional 
convention assembled at Philadelphia in May, 1787. 1 Very 
soon after the organization had been completed, two propo- 
sitions were submitted to the convention as bases for delib- 
eration: the one a set of resolutions referring chiefly to 
alterations which should be made in the Articles of Confed- 
eration, by Randolph, of Virginia ; 2 the other a draft of a 
constitution to be substituted for the articles, submitted by 
Charles Pinckney, of South Carolina. 3 

Randolph's propositions did not refer to the specific 
powers to be granted to the departments of government 
under the system proposed by him, and consequently no 

1 The convention, according to the date appointed by the congressional resolu- 
tion, should have assembled May 14, the second Monday in May ; but, owing to the 
delay on the part of the deputies in arriving, the convention was not organized until 
May 25." Debates in the Several State Conventions on the Adoption of the Federal 
Constitution," ELLIOT, Z>e&ote*,Vol. I, p. 20. 

2 Ibid., p. 143. 3 Ibid., p. 145. 



mention of the coinage power is found in his resolution*. 
In the sixth article of Pinckney's draft, however, dealing 
with the powers to be conferred upon the legislature of the 
new government, are found the following clauses: 

Art. VI. The legislature of the United States shall have power 
to .... (3) Borrow money and emit bills of credit. .... (9) Coin 
money, and to regulate the value of all coins, and fix the standard 
of weights and measures (18) Declare the law and punish- 
ment of counterfeiting coin . . . . , etc. 

Art. XI. No state shall without the consent of the legislature 
of the United States .... emit bills of credit or make anything 
but gold, silver, or copper a tender in payment of debts. 

These two proposals were referred to the convention 
sitting as committee of the whole, and there debated until 
July 24, when the proceedings of the convention up to that 
time, together with Pinckney's draft, were referred to a com- 
mittee of detail consisting of five members selected from 
the convention by ballot 1 In the meantime, though there 
had been no discussion of the coinage or money powers of the 
proposed government, there had been one or two interesting 
allusions to the general subject in connection with other 
powers under discussion ; for example, on Friday, June 8, 
in discussing the advisability of giving to the federal legis- 
lature the power to negative state legislation, Mr. Gerry, 
of Massachusetts, who was somewhat doubtful as to the 
general power, said ' he had no objection to restraining the 
laws (on the part of the states) which might be made for 
issuing paper money. 

On June 15,' Patterson, of New Jersey, had submitted 
still another set of resolutions as a proposal for the new 
government, and on the 18th this plan was under discus- 

I The committee of detail consisted off Rntledjr*. South Carolina ; Randolph. 
Virginia; Oorham, Massachusetts; Ellsworth, Connecticut : and Wilson. IVnujrl- 
Tania.-/Wd,, p. 217. 

"Yate* 1 Minute*," /6id.. p. 400. Ibid., p. ITS. 


sion. In this connection Mr. Madison said: 1 "The rights of 
individuals are infringed by many of the state laws, such as 
issuing paper money, and instituting a mode to discharge 
debts differing from the form of contract." Since the "Jer- 
sey" plan 2 provided no means of preventing this he opposed 
the plan. 

On August 6, the committee of five 3 reported to the 
convention the draft of a constitution, in which article VII 
dealt with the powers to be conferred upon the legislature 
very much in the form of Pinckney 's draft : 4 

Art. VII. Sec. 1. The legislature of the United States shall 

have power .... (4) To coin money (5) To regulate the 

value of foreign coin (8) To borrow money and emit bills 

on the credit of the United States (12) To declare the law 

and punishment of .... counterfeiting the coin of the United 
States . . . . , etc. 

Article XII contains the prohibition on the states intro- 
duced by the committee: "No state shall coin money," etc. 

Art. XIII. No state, without the consent of the legislature of 
the United States, shall emit bills of credit, or make anything but 
specie a tender in payment of debts, etc. 

On August 16 these provisions came up for discussion. 
The debate as reported by Mr. Madison may be given in 
full: 5 

MB. GOUVEBNEUB MOBBIS [Pa.] moved to strike out " and emit 
bills on the credit of the United States." If the United States had 
credit such bills would be unnecessary; if they had not, unjust 
and useless. 

MB. BOTLEB [S. C.] seconds the motion. 

J ELLIOT, Debates, Vol. I, p. 425. 

2 The Jersey plan was rather for a league of states than a federation. 

'Otherwise known as " Committee on Detail." As to changes made in this com- 
mittee, see MEIGS, Growth of the Constitution in the Federal Convention of 1787, pp. 
140, 180. 

* ELLIOT, op. cit., VoL I, p. 226. " Madison Papers," ibid., Vol. V, p. 434. 


MR. MADISON [Va.]: Will it not be sufficient to prohibit making 
them a tender? This will remove the temptation to emit them with 
unjust views; and promissory notes in that shape may in some 
emergencies be best. 

MR. OOOVERNEOR MORRIS: Striking out the words will still leave 
room for the notes of a responsible minister, which will do all the 
good without the mischief. The moneyed interests will oppose the 
plan of government if paper emissions be not prohibited. 

MR. GORHAM [Mass.] was for striking out without inserting any 
prohibition. If the words stand, they may suggest and lead to 
the measure. 

MR. MASON [Va.] had doubts on the subject. Congress, he 
thought, would not have the power unless it was expressed. Though 
he had a mortal hatred to paper money, yet, as he could not foresee 
all emergencies, he was unwilling to tie the hands of the legislature. 
He observed that the late war could not have been carried on had 
such a prohibition existed. 

MR. GORHAM: The power, as far as it will be necessary or safe, 
is involved in that of borrowing. 

MR. MERCER [Md.] was a friend to paper money, though in the 
present state and temper of America he should neither propose nor 
approve of such a measure. He was consequently opposed to a 
prohibition of it altogether. It will stamp suspicion on the gov- 
ernment to deny it discretion on this point. It was impolitic also 
to excite the opposition of all those who were friends to paper 
money. The people of property would be sure to be on the side 
of the plan, and it was impolitic to purchase their further attach- 
ment with the loss of the opposite class of citizens. 

MR. ELLSWORTH [Conn.] thought this a favorable moment to 
shut and bar the door against paper money. The mischiefs of the 
various experiments which had been made were now fresh in the 
public mind, and had excited the disgust of all the respectable 
part of America. By withholding the power from the new govern- 
ment, more friends of influence would be gained to it than by 
almost anything else. Paper money can in no case be necessary. 
Give the government credit, and other iuaoureet will offer. The 
power may do harm, never good. 

MR. RANDOLPH [Va.], notwithstanding his antipathy to paper 
money, could not agree to strike out the words, as he could not 
foresee all the occasions that might arise. 


MB. WILSON [Pa.]: It will have a most salutary influence on 
the credit of the United States, to remove the possibility of paper 
money. This expedient can never succeed while its mischiefs are 
remembered ; and, as long as it can be resorted to, it will be a bar 
to other resources. 

MR. BOTLEB [S. C.] remarked, that paper was a legal tender in 
no country in Europe. He was urgent for disarming the govern- 
ment of such a power. 

MB. MASON [Va.] was still averse to tying the hands of the legis- 
lature altogether. If there was no example in Europe, as just 
remarked, it might be observed on the other side, that there was 
none in which the government was restrained on this head. 

MB. READ [Del.] thought the words, if not struck out, could be 
as alarming as the mark of the beast in Revelation. 

MB. LANGDON [N. H.] had rather reject the whole plan than 
retain the three words, " and emit bills." 

On the motion for striking out the vote stood nine yeas to 
two noes. l The clause as amended was then adopted. 

On the next day the twelfth clause of the same section 
was amended so as to secure securities, as well as coin, of the 
United States against counterfeiting, and so adopted. 2 

On August 28, article XII was taken up. As proposed by 
the committee of five it read: "No state shall coin money; 
nor grant letters of marque and reprisal ; nor enter into any 
treaty, alliance, or confederation ; nor grant any title of nobili- 
ty." Article XIII read: "No state, without the consent of the 
legislature of the United States, shall emit bills of credit, or 
make anything but specie a tender in payment of debts ; lay 
imposts, or duties on imports "* 

i Tea: New Hampshire, Massachusetts, Connecticut, Pennsylvania, Delaware, 
Virginia, North Carolina, South Carolina, Georgia 9. No: New Jersey and Mary- 
land 2. ELLIOT, op. ctt., Vol. I, p. 245 ; Vol. V, p. 435. " The vote in the affirmative by 
Virginia was occasioned by the acquiescence of Mr. Madison, who became satisfied 
that striking out the words would not disable the government from the use of public 
notes, as far as they were safe and proper, and would only cut off the pretext for a 
paper currency, and particularly for making the bills a tender either for public or 
private debts." 

Ibid., Vol. I, p. 246. 3 ibid., p. 229. 


MR. WILSON [Pa.] and MB. SHERMAN [Conn.] moved ' to insert 
after "coin money" in article XII the word*, "nor emit bilk of 
credit, nor make anything but gold and silver a tender in payment 
of debts," making the prohibition absolute, instead of making the 
measures allowable as in the thirteenth article, with the consent of 
the legislature of the United States. 

MR. QORHAM [Mass.] thought the purpose would be as well 
secured by the provision of article XIII, which makes the consent 
of the general legislature necessary ; and that in that mode no 
opposition would be excited, whereas an absolute prohibition of 
paper money would rouse the most desperate opposition from its 

MR. SHERMAN thought this a favorable crisis for crushing paper 
money. If the consent of the legislature could authorize emissions 
of it, the friends of paper money would make every exertion to get 
into the legislature in order to license it. 

The question being divided on the first part, "nor emit 
bills of credit," eight states voted aye, 1 one state voted no, 1 
and one was divided. 4 The second part of the amendment, 
14 nor make anything but gold and silver a tender in pay- 
ment of debts," was unanimously agreed to,* eleven states 
being present." The various clauses of the twelfth and 
thirteenth articles, as announced, were then adopted. 

On September 8, a committee of revision consisting of five 
members of the convention was appointed to revise the style 
of and arrange the articles agreed to by the house. 1 This 
committee consisted of Mr. Johnston, Mr. Hamilton, Mr. 
Gouverneur Morris, Mr. Madison, and Mr. King and 
reported on the 12th a revised draft of the constitution.' In 
this draft, the clauses referring to the coinage power are 
found in the form and order finally adopted, that is, as the 

> Ibid., Vol. V, p. 484. 

>.4ye: New Hampshire, Massachusetts, Connecticut, Pennsylvania. Delaware, 
North Carolina, South Carolina, Georgia-*. 

*JVo-Virffinia. Divided- Maryland. 

Ibid., p. 485. Ibid., Vol. I. p. 271. 

/Wd., p. 296. /Md.. p.298. 


second, fifth, and sixth clauses of section 8, under article I. 
The prohibition on the states is found as in the final form in 
section 10 of article I. 1 

The form as finally adopted then read as follows: 

Art. I Sec. 8. The Congress .... shall have power 

.... (2) To borrow money on the credit of the United States. 
.... (5) To coin money, regulate the value thereof, and of foreign 
coin, and fix the standard of weights and measures. (6) To pro- 
vide for the punishment of counterfeiting the securities and current 
coin of the United States. 

Art. II Sec. 10. No state shall coin money nor emit 

bills of credit nor make anything but gold and silver coin a tender 
in payment of debts, nor . . . . , etc. 

Such was the action of the convention. 

A review of the proceedings in the federal convention 
leads at once to an inquiry as to those in the conventions of 
the several states in which the constitution thus drawn up 
and submitted to the people through congress was, in accord- 
ance with Article VII, and with the resolution of Congress, 2 
finally ratified. Little information as to the grant of power 
to the federal legislature, however, can be obtained from 
their discussion. The prohibition on the states attracted 
all the attention given to the question of the currency under 
the proposed government. 

For example, in the North Carolina convention, a ques- 
tion of controlling influence was as to the effect of the pro- 
posed constitution on the paper issues of that state, to which 
resort had been had in the years 1783-86, and which had 
been made full legal tender. 8 So in the Virginia convention, 
on June 8, 1788,* and on August 6, 6 the prohibition on the 

1 Section 10 was further amended, but not so as to affect the subject under dis- 
cussion, on September 14. ELLIOT, op. cit., Vol. I, p. 311. 

2 For congressional resolution submitting the constitution to the legislature 
the several states, see Ibid., p. 319. 

*BCLLOCK, op. cit., p. 195; ELLIOT, op. cit., Vol. IV, pp. 182-6. 
Ibid., Vol. Ill, p. 179. 5 Ibid., p. 378. 


states comes up for discussion and eulogy ; but the grant of 
power to Congress is passed over in silence. In South 
Carolina 1 only is there a reference to the federal power; and 
there not such a discussion as to throw light on the question 
of the extent of power. On May 20, Mr. Pinckney, after 
enumerating the evil effects of paper emissions, argued that 
South Carolina above all states needed the provisions look- 
ing to sound currency. She would have an abundance of 
specie because of her exports. "Besides, if paper should 
become a necessity, the general government will still pos- 
sess the power of emitting it, and constitutional paper well 
funded must ever answer the purposes better than state 
paper." 1 

Three questions suggest themselves at once on reading 
these proceedings: In the first place, what was the differ- 
ence between the powers actually conferred on Congress 
and those that would have been conveyed had the clause 
" and emit bills on the credit of the United States " been 
allowed to stand? In other words, (1) what was the effect 
of striking out the clause? And (2) what did the f ranters 
of the constitution understand to be the effect of their action 
in so striking out the clause ? (3) What was the extent of 
the limitations imposed on the states? An answer to only 
the second of the three can be given now. Answers to the 
first and third will be found below in the history of legal- 
tender money under the constitution. 

Certain inferences can be drawn from the debate itself. 
It may be noticed that there were three classes of speakers: 
first, those who wished to shut out all possibility of a resort 
to paper money under the proposed constitution ;* second, those 
who were the friends of paper money, but recognized the 

> Ibid., Vol. IV, p. MS. 

* Libbjr shows a most interesting coincidence throughout in the paper-money 
party and the anti-federal party. Op. cit., chap. iii. 
1 Ellsworth, Wilson, Read. Lanjrdoo. 


necessity in the existing state of public sentiment of placing 
under control the power to resort to its use ; ' third, those 
who realized the danger of conferring such power, but feared 
the alternative of cramping the new government. 2 

It will be noticed, too, that no definitions of the terms 
used are given. The only hint of a definition or classifica- 
tion is found in Mr. Gorham's words: "The power [i. e., to 
emit bills on the credit of the United States], so far as it is 
necessary or safe, is involved in that of borrowing." Just 
what was the distinction between safe "borrowing" and 
unnecessary and unsafe bills of credit will have to be discussed 
in another connection. Attention is simply called now to 
Mr. Gorham's classification. 

Notice may also be given to certain differences of 
opinion as to the effect of their action on the part of the 
speakers. It will be remembered that the theory upon 
which the government was established was that of a govern- 
ment of limited powers. Those powers only were to be 
possessed which were by express grant or necessary implica- 
tion conferred. Mr. Mason, therefore, thought the power 
would not be possessed unless expressly granted; Mr. 
Morris thought that if the words were stricken out there 
would still be room for the notes of a responsible minister; 
while Madison, in the note cited, expresses the opinion, 
which led him to cast the decisive vote in the Virginia dele- 
gation, that by striking out the clause the pretext of a paper 
currency would be cut off, while the government would still 
have the power to issue government notes so far as they 
would be safe and proper. Indeed, "nothing very definite 
can be inferred from this record" as to the views of the 
members of the convention. 3 Certainly it is not fair to say, 

l Mercer. 2 Randolph, Morris, Madison. 

'EL J. JAKES, "The Legal-Tender Decisions," American Economic Association, 
Vol. in, p. 67. 


as Mr. Bancroft says, 1 that "each and all [the speakers] 
understood the vote to be a denial to the legislature of the 
United States of the power to emit paper money/* although 
this was indeed the view of some members other than those 
who shared in the debate. 

Luther Martin, for example, in his address to the House 
of Delegates of the Maryland legislature,' expresses the 
following views: "By the original articles of confedera- 
tion the Congress have power to borrow money and emit 
bills on the credit of the United States, agreeable to which 
was the report upon this system as made by the committee 
of detail. When we came to this part of the report a 
motion was made to strike out the words 'emit bills of credit 1 
Against this motion we urged that it would be improper to 
deprive the Congress of that power; that it would be a 
novelty unprecedented to establish a government which 
should not have such authority ; that it would be impossible 
to look forward into futurity so far as to decide that events 
might not happen that should render the exercise of such a 
power absolutely necessary ; and that we doubted whether if 
a war should take place it would be possible for this country 
to defend itself without resort to paper credit, in which case 
there would be a necessity of becoming a prey to our 
enemies or violating the constitution of our government; 
and that, considering that our government would be prin- 
cipally in the hands of the wealthy, there could be little 
reason to fear an abuse of the power by an unnecessary or 
injurious exercise of it. But .... a majority of the con- 
vention, being wise beyond every event, and being willing 
to risk any political evil rather Man admit the idea of a 
paper emission in any possible case, refused to trust the 

i Plea for the Conttitution, Wounded in the Hotue of it* OnardiaM. p. 40. There 
is no question of their Tiews as to creating the power to the Ut*. It will be el*r 
from the debate that they were afraid to *o quite to far with the federal gonnmttA. 

* ELLIOT, op. eit.. Vol. I, p. 309. 


authority to a government to which they were lavishing the 
most unlimited powers of taxation, and to the mercy of 
which they were willing blindly to trust the liberty and 
property of the citizens of every state in the Union; and 
they erased that clause from the system." 

Hamilton, on the other hand, says in his " Letter to Con- 
gress," December 14, 1790 : l " The emitting of paper money 
by authority of the government is wisely prohibited to the 
individual states by the national constitution ; and the spirit 
of that prohibition ought not to be disregarded by the 
government of the United States " showing that he believed 
the power to be in Congress. 

The interesting feature about the discussion is the absence 
of emphasis laid upon the legal-tender question;" and this 
seems the more remarkable when a prohibition in that regard 
had been twice used by Parliament as a remedy for difficul- 
ties growing out of excessive resort to paper issues, difficul- 
ties identical with those through which the states had just 
passed. There was no question about the states; 3 all power 
in this direction was to be surrendered by them;* but, as to 
the federal legislature, the reasoning seems to have amounted 
to this: to prohibit the legal-tender quality being attached 
to bills of credit implies that such bills will be emitted ; but 
it is not desirable that such bills be emitted ; nor is it expe- 
dient to go to the extreme of saying that they never shall be 
put forth. Silence on the subject is, therefore, the safest 
policy. Thus, the clause granting to Congress the power 

1 American State Papers, Vol. V, p. 71. 

2 This is pointed out by PROFESSOR THATER, " Legal Tender," Harvard Law 
Review, Vol. I, p. 74. 

* Although the vote was not unanimous on this question 8V4tolV4. See Feder- 
alist, Nos. 42, 44. 

* Mr. Bancroft's statement that the convention " shnt and barred the door " and 
" crushed " paper money is quite true if applied to the states. He is quoting Roger 
Sherman, who spoke on this question August 28. Plea for the Constitution, etc., p. 51 ; 
ELLIOT, Debates, Vol. V, p. 434. 


to emit bills was stricken oat, and no prohibition was laid. 
Silence as to that was maintained ; and all that can be said 
as to the interpretation of that silence is that, although there 
was a strong and well-nigh universal dread of paper issues, 
there was a stronger dread of too narrowly limiting the 
powers of the new legislature; and that there was neither 
a very definite nor a unanimous opinion as to the effect of 
striking out the clause, or as to the extent of the power 



Legislation of 1792 Foreign Coins Standard of Gold Coins Changed, 
1837 Subsidiary Silver Coins, 1853 " Demonetization " of Silver, 

UP to this point in the discussion it has seemed best to 
separate the story of the American experience on the basis of 
political changes, which has Jmeant a chronological division ; 
that principle of division will not, however, prove satisfactory 
in treating of the action the federal goverment since organ- 
ized under the constitution. The following chapters will 
therefore be framed on a topical basis. First will be 
described those forms of metallic money on which the 
legal-tender quality was bestowed ; the resort to the use of 
bills by the federal government and the bestowal upon them 
of this quality of being a legal tender "in all debts, public 
and private," will then demand attention; and, finally, the 
notes of the United States banks and those of banks organ- 
ized under state charters which have possessed the quality to 
any extent will then be discussed. To each of these topics a 
chapter will be devoted. Within the chapters the plan of 
treatment will again be chiefly chronological. 

Before proceeding to a review of the exercise of this power 
in connection with the metallic money of the country, some 
of the results of the investigation may be called to mind. It 
will be remembered that under the English system the coin- 
age power, a portion of the royal prerogative, included the 
power of altering the legal value of the coins of the realm 
without altering the amount or standard fineness of the metal 
of which they were composed ; or of altering the amount of 
metal or its standard fineness without making any change in 



the legal value. In each case the legal-tender quality of the 
changed coin resulted from the authoritative act. 

In this country no coins had been minted, except for a 
short time in Massachusetts; but the power to bestow the 
legal-tender quality upon money, or upon substitutes for 
money, had been assumed by the colonies, subject to regula- 
tion by Parliament. And only those media of exchange pos- 
sessed the quality upon which it was expressly bestowed. 

Under the Articles of Confederation the individual com- 
monwealths only had exercised the power, and they had done 
so with reference not only to coin, but also to their own bills 
of credit and to those of the Confederation. Under the stress 
of the experiences in connection with these bills they had 
denuded themselves by the constitution of the power to make 
anything other than gold or silver coin a tender, as well as of 
the power to issue bills at all. They had set up, co-ordinate 
in dignity and power with themselves, another government, 
limited as to the sphere of its powers, but sovereign within 
that sphere, upon which had been bestowed the power "to 
coin money and regulate the value thereof and of foreign 
coin." Such powers as were expressly bestowed upon this 
government were bestowed in the terms of constitutional law 
familiar at that time. The power to "coin money" might 
well be understood to include the power to make such coin a 
legal tender. This was the interpretation put upon that 
clause by the first legislation enacted under it 

The new government was organized under the constitu- 
tion in 1789. Congress met on March 4 ' of that year. On 
April 15, 1790,* Hamilton was asked to report to the House 
of Representatives plans for the establishment of a mint and 
the means of securing a currency. His report was made to 
the House on the 28th of January, 1791,' and to the Senate 

*An*altofCo*ffre~,Vol. I. p. 15. * /Wd.. Vol. H, p. 1330. 

American State Paper*, Vol. V, p. 91. 


on February 7. It was there referred to a committee. On 
December 26 a bill was reported, and passed the Senate on 
January 12, 1792, and, with unimportant amendments affect- 
ing only the outward appearance of the coins proposed, was 
agreed to by the House on March 24 and became a law April 
2. 1 This bill provided for the establishment of a mint and 
the creation of necessary offices. The coins to be issued were 
described. They 2 were to be of gold, silver, and copper. 

The gold coins were to be eagles and quarter-eagles, con- 
taining, respectively, 247^ and 61 J grains of fine gold, or 270 
and 67 grains of standard gold. 3 The silver coins were 
dollars, or "units," and fractions of a dollar. The dollar 
was to contain 371 pure, or 416 grains standard, silver; 4 
half- and quarter-dollars, dimes, and half-dimes contained 
proportional amounts of silver. 5 

The interesting section, for the purposes of this study, 
is section 16, declaring that " all the gold and silver coins 
which should be struck and issued from the said mint should 
be lawful tender in all payments whatsoever, those of full 
weight according to their respective values, hereinbefore 
declared, and those of less than full weight at values propor- 
tional to their respective weights."' 

In this way it was assumed that, as to metallic money, the 
legal-tender power was included in the coinage power; and 
only in 1797 was it suggested that there might be a doubt 
upon this point. Then, on December 14, Mr. Williams 

1 Statutes at Large, Vol. 1, p. 246. 2 Sec. 9. 

3 The coins as before were to be H fine- The coins designated by the Congress 
of Confederation had contained 246 jWo grains of fine gold. Journals of Congress, 
Vol. XI, p. 130. 

* As this was legally equal to 243 grains pare gold, the ratio was 15 : 1. Sec. 11. 
6 The copper coins were cents and half-cents, containing 11 and .V pennyweights 

of copper, respectively. In 1783 and in 1796 Congress reduced the weights and the 
"intrinsic value" of the cent to accord with the increased value of copper. This 
was imported by government. These cents were not a legal tender. Statutes at Large, 
Vol. I, pp. 283, 299, 475. 

Sec. 16. Nothing was said of the copper coin. 


"expressed his doubt as to the power of Congress to declare 
what should be a legal tender for the states. He supposed 
Congress had not the power of saying what should and what 
should not be a tender in the several states. He thought he 
was warranted in this assertion by the constitution in the 
eighth section of the first article, in which it was said that 
Congress should "have power to coin money," etc., and in the 
tenth section of the same article, in which it speaks of what 
the individual states may not do. It was evident that the 
states might make a tender of whatever coins they pleased, 
provided they did it at the value fixed on it by Congress. 11 ' 
No one took the trouble to answer the suggestion, however, 
and the power was assumed to exist and continued to be 

In the same way the power to regulate the value of for- 
eign coins was exercised by making these coins a legal ten- 
der at specified values. 

It was the purpose of the act of 1792 to supply a cur- 
rency adequate for the needs of the country. But, as time 
would be required for the mint to begin operations and for 
the coins issued therefrom to gain circulation, it was neces- 
sary in this interim to recognize the foreign coins then cur- 
rent and constituting the only medium of exchange. And 
so, by an act of February 9, 1793, the tender quality* was 
bestowed on certain coins at prescribed rates.' The coins 
mentioned were the gold coins of Britain and Portugal,* of 
France, Spain, and the Spanish colonies/ and the Spanish 
milled dollar of silver/ These were to cease T to be legal 

I AnnaU of Conffrem, 1797-8, p. 931. 

* They were to be a " legal tender for the payment of all debts and demands." 
'There had b*en an estimate of the values of fore Urn eolns Aotut 4, 1790. 

Statute at Large, Vol. I, p. 167. 

* Those weighing 27 grains were to pass at $1. 
& Those weighing 27] grains were to pass at Q. 

$1. * Except the Spanish dollar. 


tender three years after the beginning of the operation of 
the mint, and provision was made for the proclamation of 
that date by the president. 

The mint went into operation in October, 1794, 1 but by 
1797, at which date, according to the act of 1795, the for- 
eign coins should cease to be a tender, the looked-for substi- 
tutes had not been found. It was therefore necessary to 
suspend the provisions of this act from time to time. 2 Only 
in 1857 was it found finally possible to dispense altogether 
with foreign coin. 3 

It will be observed that in the case both of the domes- 
tic and of the foreign coin the legal-tender quality was 
expressly bestowed, and the precedent established by the 
colonies in connection with their substitutes for coin was 
followed, rather than the English method, according to 
which the tender quality flowed from the currency and the 
legality of the coin. It will also be noted that the legislation 
is broad enough to cover both cash and time transactions ; so 
that it was again true that the buyer in cash transactions, and 
the debtor in time transactions, 4 had the power of determining 
which of the forms of coin legitimized should be used in 
canceling an obligation. 

The question suggests itself as to whether the coinage 
power thus bestowed and exercised was equivalent in all 
respects to the ancient prerogative power enjoyed by the 
English kings. The answer to this question would have 
been unqualifiedly in the negative during the early years of 

1 Annals of Congress, 1796-97, p. 2578. 

2 The president's proclamation of July 22, 1797, named October 15, 1797, as the date 
for the expiration. Annals, 1805-6, p. 205. 

3 These acts wore of dates, February 1, 1798, extending time for three years from 
January 1, 1798; April 3, 1802; April 10, 1806; April 29, 1816; March 3, 1819; March 3, 
1821 ; March 3, 1823; June 25, 1834; March 3, 1843; February 21, 1857. 

4 There was, however, a great difference between such legislation as this and 
the application of early English proclamations to cash transactions. Hero, there 
was neither an accompanying sanction to enforce the right of the buyer nor legisla- 
tion intended to control prices, to which resort had been had in earlier times. 


the republic, if the power to exercise is understood to include 
the power to abuse. While the government Bet up by the 
constitution was said to be sovereign within its proper sphere, 
the doctrine was that the sovereignty, in the sense in which 
it had inhered in the English kings, had passed to the people, 
not to the government, of the United States. 80 much of 
the right of English monarchs as had been derived from the 
doctrine of unlimited and prerogative power was wholly 
without the sphere of federal power. The abuses of the 
coinage which had been justified by the courts on the basis 
of this power were limited to the reign of Henry VIII. and 
his immediate successors. For over two centuries they had 
ceased on the part of the English government Until the 
time of the construction of the Legal-Tender Acts 1 it would 
have seemed absurd to argue that such a power was included 
in that granted to the federal Congress by the constitution 
of the United States. 

It was, then, most unfortunate that the first alteration 
made by law in the metallic coins of the country partook of 
the nature of a debasement. The disappearance of gold coin 
from circulation" and the scarcity and confused state of the 
silver coinage* required action. As the gold coins had dis- 
appeared from circulation because their mint value was less 
than their market value in terms of silver, this effect could 
be overcome either 4 by reducing the amount of gold in the 
gold coins or by increasing the amount of silver in the silver 
coins, which were legally equivalent the one to the other. 
As all debtors were at this time meeting their obligations in 
terms of silver, it was decided that less injustice would be 
wrought by the reduction of the gold than by the enlargement 

LACOHLIN, History of Bimetallism in tke United State*, (4th d.), chap. IV. 
The only legal medium actually in use wan the silver. "of which there U not a 
sufficient quantity to answer the ordinary purposes of business " Ibid., p. 54. 
/Wd.. p. 71. 


of the silver coins. The amount of the gold in the legal coins 
was therefore reduced by 6.26 per cent, by the act of 1834, 
and the ratio of gold to silver 1 changed from 1: 15 to 1:16. 
As the market ratio was at this time 1:15.7, the change was 
such as to overvalue gold, and this method, leading to a 
charge of having debased the coinage, was not carried through 
Congress without protest. 2 It was argued, with evident 
truth, that such a change would impair existing contracts 
and enable a debtor to cancel his obligation by the payment 
of less than the creditor had had a right to expect: but the 
failure to recognize the fact that the change in the market 
ratio of gold to silver since 1792 had been due to a decline 
in the value of silver rather than to an appreciation in the 
value of gold, together with the inclination, which has 
always seemed to prevail in legislative bodies, to favor the 
debtor rather than the creditor class, led to the rejection of 
these arguments and the reduction of the gold eagle from 
247.5 grains to 232 grains. 

This alteration constituted an unfortunate precedent later 
on, when, in the opinion of the court in the second Legal 
Tender Decision, 3 it was said: " By the act of June 28, 1834, 
a new regulation of the weight and value of gold coin was 
adopted and about 6 per cent, taken from the weight of each 
dollar. The debts then due became solvable with 6 per cent. 

less gold than was required to pay them before The 

creditor who had a thousand dollars due him July 31, 1834, 
the day before the act took effect, was entitled to one thou- 
sand dollars of coined gold of the weight and fineness of the 
then existing coinage. The day after, he was entitled only 
to a sum 6 per cent, less in weight and in market value, or to a 
smaller number of silver dollars." The court goes on to 

1 Statutes at Large, Vol. IV., p. 799, sec. 1. The gold coins minted prior to July 
31, 1834, were to be receivable in all payments at 94.8* cents the pennyweight. 

2 Debate of Congreu, Vol. X, IV, pp. 4665, 4669. 12 Wallace, p. 457. 


argne that no one would claim that herein was to be found a 
violation of the obligation of contracts. Bat the court had 
not exactly stated the claim of the creditor under the pre- 
vious legislation. His right was to demand either a thousand 
dollars in gold or the same number of coins in silver, as the 
debtor preferred; but as a thousand dollars of gold could 
not be secured by a thousand dollars of silver, the debtor 
regularly selected silver. It might have been argued that 
to reduce the gold to a weight corresponding with the 
market value of silver was not in violation of contracts ; but 
it would be difficult to persuade the fair-minded that a greater 
reduction than that was not in fact and in morals, if not in 
law, a violation of all existing contracts. 

The need of legislation affecting the tender quality of 
the silver coins was likewise recognized. It was suggested 
that the subsidiary silver coins should be a tender only to 
the sum of five dollars. There was thought to be a question 
as to the tender quality of copper, and suggestion was made 
that it should be such for the sum of ten cents; and pro- 
vision for power to reject coins of less than proper weight 
was declared desirable. 1 

On June 30, 1832, a committee of the House appointed 
"to inquire into the expediency of making gold a tender 
in large and silver a tender in small payments, or the 
reverse . . . . , and also the expediency of making silver 
the only legal tender, and of coining and issuing gold 
coins of a fixed weight and fineness which shall be 
received in payment of all debts to the United States at 
such rates as may be fixed from time to time, but shall not 
otherwise be a legal tender, etc.," reported' that they deemed 
the power and duty of Congress to remedy all defects in 
the currency beyond question ; that the standard of value 

* See report of Mr. Lowndet for special committee. January . 1M9; $10 WM 
attested as limit by report of January 11, 1KB. 

>Con?rettionaJ Dtbat*, 1833-34, Appendix, p. 243. 


should be legally and exclusively as it was practically regu- 
lated in silver, 1 etc. And while the bill which became a law 
was still before the House, an interesting proposition was 
made by Mr. Gorham, who introduced an amendment 2 to the 
effect that after January 1, 1840, the legal tender for the 
payment and discharge of all debts contracted after the 
passage of the bill under consideration should be one-half in 
silver and one-half in gold coins, which should be made cur- 
rent in the United States, sums less than $5 and remainders 
less than $5 to be payable in silver. 

This act of 1834 was supplemented by an act in 1837 8 
changing the amount of alloy in silver coins so that they, 
too, should be -^ fine, 4 and leaving all coins, gold and silver, 
full legal tender as before. 5 

Save for the authorization of the gold double eagle and 
dollar, to be a tender for $20 and $1 in all payments, 6 
and of the silver three-cent piece to be a tender for sums of 
thirty cents and under, 7 no change is to be noted in the law 

1 They recommend a change in the ratios of gold to silver in primary coins to 
1:15.625; for subsidiary coinage, to 1:16; and the charge of l'/i per cent, gold and 1 
per cent, silver for seigniorage. 

2 Debates of Congress, Vol. X, rv, pp. 4652, 4653, 4673. See also LAUGHLIN, op. cit., 
p. 62. During this debate, too, the question as to the power of Congress which had 
been raised in the early days of the government was again suggested. " In my opin- 
ion," said Mr. Jones, of Georgia, " this government has no authority under the con- 
stitution to make anything a good tender in payment of debts. To Congress is given 
the power to coin money and regulate the value thereof. To the states is reserved 
the power to make gold and silver and them only a tender in payment of debts. I 
know that some gentlemen believe that when the value of a coin is fixed by Congress 
it becomes necessarily a legal tender and the courts will so decide. To this I offer no 
objection. If such be the legal effect, be it so. If such be not the legal effect, Con- 
gress has no power to make any coin a legal tender. If it is the legal and necessary 
effect, there is no necessity of Congress to do so." 

Statutes at Large, Vol. V, p. 136. 

< Sec. 8. The weight of the dollar was reduced from 416 to 412V4 grains, the 
amount of fine silver remaining 371% grains. 

6 Sections 9-11. 6 Ibid., Vol, IX, p. 394, sec. 2. 

7 March 3, 1851. By this act three-cent pieces of such weight were authorized 
that a nominal dollar (thirty-three pieces) contained only 80/100 of a silver dollar. 
Their issue was very limited, and was stopped after a short time. By the act of 1853 
the standard of these was raised to correspond with that of the other silver coins. 
Ibid., p. 591 ; Ibid., Vol. X, p. 160. 


governing the legal-tender metallic money until the redac- 
tion of the silver fractional coins to the position of subsidi- 
ary coins in 1853,' by the enactment of a law the effect of 
which was to make gold the only unlimited legal tender in 
actual use. 

The effect of the act of 1834 was soon manifest in the 
substitution of gold for silver coin in general use ; and this 
effect was greatly enhanced by the discoveries of gold in the 
last years of the decade 1840-50 and the great increase in the 
supply of that metal during the next few years. No silver 
dollars had been coined between 1806 and 1830, and few of 
them after that ;* but with gold so overvalued in relation to 
silver, the fractional coins, containing, as they did, propor- 
tional amounts of silver, were driven out of circulation.' 
To meet this situation, it was determined to reduce the frac- 
tional silver coins wholly to a " subservient " position* by 
reducing the amount of pure metal in them below the 
proportional amount. 

A bill having this object in view passed the Senate March 
30, 1852.' It provided for the reduction of the half-dollar 
from 206 to 192 grains, and the other coins in proportion. 
These coins were to be a legal tender for amounts not 
exceeding $5.' No mention was made of silver dollars, but 
there were few, almost none, in circulation, and they were at 
a premium. This bill went to the House on May 3, 1852,' 
and was reported back from the Committee on Ways and 
Means with amendments on the following February 1.* 

I February 21, 1853. * LACOHUX. op. rif ., p. . 

* A cold dollar would bring only 357.35 grains of silrer as bullion in 1833; in 
other word*, the silver dollar was worth 104 cents in gold. See memorial from New 
Jersey, Globe, Thirty-second Congress, id Sess., p. 630. 

See Mr. Dunham's speech. Appendix, Ibid., p. 190. 

* Baring been introduced March K.-/6id.. p. 6M. 

* Sees. 1 and 2. This limit was raised to HO by act of June 9. Igl9.-Stahttm at 
Large, Vol. XXI, p. 7. 

* Qlobe, Thirty-second Congress, 3d Sess.. pp. 512, 1235. 
/6<d., p. 458. 


Among the amendments suggested by the committee was 
one substituting for the limited legal-tender quality receiva- 
bility for public dues. The object of this provision being 
simply to make the coins then provided generally acceptable, 
the amendment was urged 1 as being adequate for that pur- 
pose. It was argued that the Senate provision would not 
only give the currency required, but would make these 
coins the standard for the smaller transactions, whereas it 
was desired to have them "purely subservient." This 
amendment, together with the others offered by the com- 
mittee, was lost, and the bill passed in the form in which it 
left the Senate. 

The result of this legislation was the accomplishment of 
the purpose had in view by those instrumental in its enact- 
ment. Gold became the sole medium for the payment of large 
sums ; the silver dollar, being undervalued, 2 was not in circu- 
lation; the overvalued subsidiary silver coins served for 
small payments until 1862, when, by the introduction of 
depreciated paper money, both gold and subsidiary silver 
coins were driven out of circulation, and the country was 
put for a number of years on a paper basis. 3 

In 1873, although no coin was in circulation, the laws 
governing the coinage of money were codified, and the con- 
ditions of law and fact then existing were recognized. 4 By 
the act then passed it was provided that the gold coins 
of the country should be a one-dollar piece, 5 weighing 25.8 
grains, which should be the "unit of value," 8 a quarter- 

1 Mr. Dunham's speech. G lobe, Thirty-second Congress, 2d Sess., Appendix, p. 190. 

2 The silver dollar remained worth 103 or 104 cents in gold up to the time of the 
Civil War. LADGHLIN, op. ct<., p. 86. 

* Until the resumption of specie payments, January 1, 1879. 

* Statutes at Large, Vol. XVII, p. 424, sec. 14. 

5 By act of September 26, 1890, the one-dollar and three-dollar and three-cent 
pieces were no longer to be coined. Ibid., Vol. XXVI, p. 485. 

8 By section 9 of the act of 1792 the silver dollar (then equal to 416 grains of 
standard silver) had been declared the unit. 


eagle ($2.50), a three-dollar piece ($8),' a half-eagle ($5), 
an eagle ($10), and a double-eagle all of which were to be 
a full legal tender in all payments, at their nominal valued, 
when not below the limit of tolerance. The subsidiary silver 
coins recognized by the act were the trade dollar,' the half- 
dollar, weighing 12 J grains of silver, the quarter-dollar, and 
the dime all of which were to be legal tender, to the amount 
of $5 * and the five-cent, three-cent, and one-cent pieces of 
baser metal, which were legal tender for payments not 
exceeding twenty-five cents. 

These provisions were followed by a prohibition: 4 No 
coins other than those enumerated and described, whether 
gold, silver, or of the minor coinage, were to be issued from 
the mint. The silver dollar of 412 grains had not bean 
mentioned. Its coinage was therefore prohibited. Nothing 
was said of its legal-tender quality. Whethef the effect of 
this act was to deprive it of the debt-paying power has been 
the subject of controversy. If the principle of interpreta- 
tion be assumed that the enumeration of some is the exclu- 
sion of others/ the silver dollar was by implication deprived 
of the legal-tender quality at the same time that it was 
expressly deprived of the character of being the unit of value. 

There has been no authoritative construction of this por- 
tion of the act, and it is difficult to imagine how there could 
have been such construction. Such dollars as were in exist- 
ence were at a premium, and were too few in number to 
become a nuisance, so that the circumstances would have 

i See note 5, p. 96. 

Four hundred and twenty grains of standard tilTer. The coin was intended 
solely for trade in the Orient. Its being made a legal tender was a mistake, and by 
resolution of July 22, 1878. par. 2, this was remedied. By aet of February 19, 101. iu 
coinage was ordered stopped after the expiration of six months. Statute at Laryt, 
Vol. XIX, p. 215, par. 2; Vol. XXIV, p. 835. par. 4. 

> Raised to $10 by act of June 9, 1879.- Ibid., VoL XXI, p. 7, see. I See. 11. 

* rpreio MIW'IU e*t ctcltuio alteriut. America* and JtafMefc rMyctojMrfta e/ 
Law, Vol. XXIII, p. 44ft. 


been peculiar under which a creditor would refuse them. 
And yet, as a theoretical question, arguments may be advanced 
to show that the effect of the act was to remove the dollar 
from the list of legal-tender coins. The act of 1873 was 
entitled, "An Act Revising and Amending the Laws Relative 
to the Mints, Assay Offices, and Coinage of the United States." 
The act of 1792 had been entitled, " An Act Establishing a 
Mint, and regulating the Coins of the United States." The 
two acts were similar in purpose, and in similar fashion 
enumerated the coins which were to be a legal tender. Not 
all lawful coins were a legal tender. The trade dollar was 
subsequently removed from the list; copper coins had never 
been classed among the tender coins. The later act reads 
as though it were intended to be substituted for prior legisla- 
tion on the subject. The section dealing with silver coins 
particularly produces that effect on the mind of the writer: 
"The silver coins of the United States shall be . . . . , 
and said coins shall be a legal tender at their nominal value 
for any amount not exceeding $5 in any one payment." ' If 
these arguments hold good, as the writer thinks, the standard 
silver dollar lost its legal-tender power by the act of 1873. 
On the other hand, it is argued by the most eminent authorities 
that the silence of the act preserved the dollar, and that its 
omission from the list left it among those coins which were a 
full legal tender. 2 Certainly, if the act of 1873 had the effect 
of repealing only those portions of prior acts inconsistent 
with it, 3 this would be the case, as there is no inconsistency 
in the silver dollar being unlimited and the subsidiary coins 
limited in their tender power. Such was the arrangement 
afterward made. 4 

i Section 15. 2 LAUQHLIN, op. cit., p. 95 ; Globe, 45tk Congress, 2d Sess., p. 640. 

3 Section 67. "That this act shall be known as 'the Coinage Act of 1873,' and all 
other acts, and parts of acts, pertaining to the mints, assay offices, and coinage of the 
United States inconsistent with the provisions of this act are hereby repealed." 


In the opinion of those who hold the latter view, the 
standard silver dollar, unaffected by the legislation of 1873, 
remained an unlimited tender; in the opinion of the writer, it 
lost even the limited power possessed by the subsidiary "flfa| 

In the following year ' the Revised Statutes were adopted. 
It was then provided: First, that no gold or silver coins of 
foreign nations should be a legal tender; 1 second, that the 
gold coins of the United States should be an unlimited ten- 
der;' third, that the minor coins should be a tender, as 
before, to the amount of twenty-five cents; * and, fourth, that 
the "silver coins of the United States" should be a tender to 
the amount of $5.* The question again arises, What were 
"silver coins of the United States?" If the silver dollar of 
4 TJI grains had been left untouched by the act of 1873, and 
could still be considered one of the "silver coins of the 
United States" within the meaning of the statutes, it was 
now reduced to the subordinate position of the subsidiary 
coins ;* if it was deprived of its tender power altogether, this 
power was not restored by the legislation of 1874. 

Unlimited legal-tender power, with authority to coin, was 
restored, after vigorous controversy, by the act of February 
28, 1878, 7 by which it was enacted that the silver dollar, as 
provided for in the act of 1837, should be coined, and should, 
with all dollars previously coined, be a legal tender "for all 
debts and dues, public and private, except where otherwise 
expressly stipulated in the contract" ' 

> Jane 22, 1874. 

ftertsed StahUet o/ the United States SS4. 

/Wd.,3585. /Wd.,987. /Md.,|Ml 

This the writer understands to be Professor Lanffhlin't view. 

i Pined OTer president's Teto. Statute at Lorye, VoL IX, p. 3. 

By this exception, which had been tacitly included in all prior lacisUUoo, the 
doctrine laid down in Branson o. Bodes, applyin* to contracts as between cola aad 
paper money, receives legislative sanction, and is applied to the two forms of 
metallic money.- See below, p. 128; also the Act of November 1. 1888. Mot*tm of 
Large, Vol. XXVIII, p. 4. 


By the legislation of 1900, 1 which declares that the dol- 
lar consisting of 25.8 grains of gold, y 9 ^ fine, shall be the 
standard unit of value, at a parity with which all funds of 
money issued or coined by the United States are to be main- 
tained, it is declared also that no change is to be construed 
as made in the legal-tender quality of the silver dollar, or 
of any other money coined or issued by the United States. 

i March U. Statutes, 1899-1900, p. 45, sec. 3, "An Act to Define and Fix the Standard 
of Value, to Maintain the Parity of All Forms of Money Issued or Coined by tho 
United States, to Refund the Public Debt, and for Other Purposes." 


Treasury Notes, "Receivable for Public Dues," 1812 15, 1837, 1846-47, 
1857, 1861 "Tender for Debts, Public and Private" The Legal- 
Tender Decisions. 

THE power to " borrow money 11 conferred on Congress by 
the constitution* implied the power to issue obligations in 
the form of evidences of indebtedness. These might assume 
either of two forms: that of a promise to pay after the lapse 
of a definite period of time, with interest until payment,' 
or that of a promise to pay on demand without interest 

In private law, a man who bears at the same time the 
relation of debtor and creditor to another may, in the 
adjustment of their relations, use the credit due him to can- 
cel that amount of the indebtedness against him.' And, by 
analogy, there is no reason why the creditor of the govern- 
ment may not be given the right to use evidences of indebt- 
edness in the same way, when he becomes the government's 
debtor as well as creditor. This principle was recognized 
in the legislation of 1797, by which evidences of the public 
debt were made receivable for the public lands. 4 

During the first two decades of the government's exist- 
ence the admonition of Hamilton was heeded, and no 
evidences of public indebtedness were issued in such form 
as to approach the character of bills of credit or to assume the 
form of money. When the stress of war came, however, it 


Snch promises may be either longtime promUes, i. e.. bond*, or ihorVibM 
promises, i. e., bills or notes. Being fiscal, and not monetary, they nay b aliMii 
together. Compare the English Exchequer Bill. 

>See article "Sot-off." American and it0(uA fneycJopoMfca of Law, VoL XIII, 
'Statute* at Large, Vol. I. p. 507. 



found in Congress a generation of young men in control 
who did not know, except by hearsay, the effects of the 
"paper money" furore in the decade following the Revolu- 
tion. 1 It was not unnatural, then, that resort should be had 
to issues of notes by the government ; and it is perhaps sur- 
prising that they were so gradually adapted to use as a 
circulating medium. 2 

A loan authorized on March 14, 18 12, 3 was taken so 
slowly that supplementary measures were felt to be neces- 
sary. On the recommendation of Gallatin, 4 then secretary 
of the treasury, the issue of five million dollars in treasury 
notes was authorized 5 June 30, 1812. 6 These notes were to 
bear 5f per cent, interest from the date of issue. They 
were payable to order, transferable by delivery and assign- 
ment on endorsement of the person to whom they were 
made payable, and redeemable a year from date of 
issue. They were to be used in paying such public creditors 
as would receive them at par, 7 and were made receivable in 
all payments to the government at their par value, with 
interest accrued to the day on which they were paid in. 8 

1 This was not true of the president, of course, or of his secretary of the treasury, 

2 In a letter to the chairman of the Ways and Means Committee (Bacon) as early as 
January 10, 1812, Gallatin says : "The advantage they [treasury notes] would have 
would result from their becoming a part of the circulating medium and taking to a 
certain extent the place of bank notes." American State Papers, Vol. VI, p. 652. 

3 For eleven millions. Statutes at Large, Vol. II, p. 694. 

* American State Papers, Vol. VI, p. 564; KNOX, United States Notes, p. 22. 

5 The bill was introduced June 12, 1812 (innate, Twelfth Congress, 1st Sess., 
pt. 2, p. 1490. See pp. 1493, 1495). It met opposition from two classes of persons: 
those who opposed all measures for carrying on the war, and those who wanted more 
vigorous measures for that purpose. It passed the House June 17 (Ibid., pp. 1510, 
1559), and the Senate June 26 (Ibid., p. 304). 

Statutes at Large, Vol. II, p. 766. ' Sec. 4. 

8 Sec. 6. Section 8 of the act of February 25, 1813, section 8 of the act of March 4, 
1814, and sections of the act of December 26, 1815, are identical: "That the said 
treasury notes, wherever made payable, shall be everywhere received in payment of 
all duties and taxes laid by the authority of the United States and of all public lands 
sold by the said authority. On every such payment credit shall be given for the 
amount of both the principal and interest which on the day of such payment may 


Nothing waBBaid about denomination; in fact, nothing lower 
than $100 was issued. 1 

Issues generally similar to thia were authorized Febru- 
ary 25, 1818,* March 4, 1814,* December 26, 1814;' but 
they were gradually adapted more fully to use as a cir- 
culating medium. The notes of the first two issues were of 
denominations of $100 and higher; the last two were issued 
in denominations as low as $20.* This rate of interest was 
convenient for calculation,* and the difficulty of transferring 
was not great ; but the need was felt of greater convenience 
as a medium of exchange. An issue was therefore authorized 
February 24, 1815, T with this end in view. By the act of 
that date the secretary of the treasury was authorized' to 
use his discretion as to the denominations in which the notes 
should be issued, and as to whether or not the notes over 
$100 should bear interest ; while those under $100 were to be 
non-interest bearing, payable to bearer, and transferable by 
delivery alone. 9 

appear doc on the note or notes thus given in payment, and the said interact shall 
on such payments be computed at the rate of one cent and one-half of a cent per 
day on every one hundred dollars of principal, and each month shall be computed 
as containing thirty days." Paragraph 6 of the act of February 25, 1815. is of identi- 
cal import, though stated In more general terms: "Shall be everywhere receivable 
in all payments." 

i KHOX, op. cit., p. 22. 

'Statutes at Large, Vol. II, p. Ml ; AnnaU, Twelfth Congress, Id Seas., pp. 98, 
919, 1110. 

i. Statutes at Large, Vol. Ill, p. 100; AnnaU, Thirteenth Congrats, 1st Sew., pp. 

Statutes at Large, Vol. in, p. 161; AnnaU, Thirteenth Congress, U Sess-, 
p. 291. 

KNOX, op. cit., p. 22. 1H per cent, a day on a 1100 note. 

'Statutes at Large, Vol. in, p. 213; AnnaU. Thirteenth Congress, 3d Bess., pp. 
1177, 1921. 

See. 3. These notes under $100 were designated "small treasury notes" aad 
were issued in denominations of JO, $S, $10, 930, $50. and upwards.-K*ox. op. t.. 
p. 38. See American State Papers, Vol. VII, pp. 854, H87. 911. 

No date was fixed for their payment. The form of these notes was that of 
receipt for all dues to the government. KKOX. op. cit., p. 38. This partisl ridsssp- 
tioo and the provisions for funding kept them from serious depreciation. 
.Statutes at Large, Vol. Ill, p. 144, see. 3; p. SIX sec. 9. The whole amount authorised 
wa <aO.MO.000. of which $,0,794 was Usued. $3,394.9W being in " .mail tr*ry 
notes," which were reissued, however, to an amount over f7.000.000. <* Reports at 
Secretary of Treasury. Dee. 8, IMS. American Stale Papers. r<*a*r. Vol. III. p. 
7; Deo. 20, 1816, Ibid., p. 146 ; also pp. S83, 445, 548, . See Kxox. op. fit., p. SI. 


It was further proposed to make these notes a tender in 
private debts. On November 12, 1814, there was intro- 
duced in the House of Representatives 1 a set of resolutions 
of which the first two provided that the Committee of 
Ways and Means should be instructed to inquire into the 
expediency of authorizing the issue of treasury notes which 
should be the only medium except gold and silver in which 
taxes could be paid; 2 that such treasury notes, if issued, 
should be a full legal tender between citizens of the United 
States, and between them and citizens of foreign states. The 
exact words of this resolution may be given: "That the 
treasury notes which may be issued as aforesaid shall be a 
legal tender in all debts due or which hereafter may become 
due between the citizens of the United States, or between 
a citizen of the United States and a citizen of any foreign 
state or country." 3 

These resolutions provoked but slight discussion. By 
the decisive vote of 95 to 45 the House refused to consider 
the proposition to make the notes a legal tender between 
private individuals, and, after a brief debate, they were all 
laid upon the table "by a large majority." 

In the summer of 1836, 4 in the prospect of a large and 
embarrassing surplus, Congress provided for the distribution 
among the states 5 of a large sum of money collected as 
federal revenue. 8 But the revenues of 1837 fell short of 

iBy Mr. Hall, of Georgia. Annals, Thirteenth Congress, 3d Sess., Vol. Ill, 
p. 557. 

2 Compare WEBSTER'S Resolutions, April 30, 1816 ; below, p. 148. 

3 The remaining three were to the effect that the secretary of war should be 
authorized to purchase in each state, territory, and collection district supplies for 
the army and navy equal to the amount of taxes due in that territorial division; 
that after one year the notes should be funded into 6 per cent, stock ; that the residue 
of the revenue of the government after payment of the annual installment of the 
public debt, etc., should be pledged to the redemption of the notes still in circulation. 

* June 23, 1836. Statutes at Large, Vol. V, p. 52. 

6 In proportion to their representation in the House and in the Senate. Ibid., 
sec. 73. The distribution was to be in four instalments (sec. 14), of which three were 

$27 ,063, 430.80. Congressional Debates, Vol. XIV, Part II, Appendix, p. 11. 


expenditures by from nix to ten millions, and the treasury 
found itself confronted by a deficit, instead of embarrassed 
by a surplus. About May 1 of the same year, owing to the 
great commercial crisis of that period, specie payments were 
suspended by the state banks, whose notes had constituted, 
since the expiration of the charter of the Second Bank of 
the United States in the previous year, the only medium of 
exchange except coin. In order to meet the deficiency in 
the revenues, the secretary of the treasury recommended ' the 
issue of $10,000,000 in treasury notes. Congress adopted 
the suggestion and gave the authorization in such a form as 
to accomplish the twofold purpose of meeting the deficiency 
in federal revenue and of supplying a medium in which those 
revenues might be collected. 1 With the second object in 
view the denomination was reduced to $50,' and the rate of 
interest, not greater than 6 per cent., was left to the discre- 
tion of the secretary of the treasury.* The notes were to be 
transferable by delivery and assignment/ and were redeem- 
able after one year. By this act no power was given to 
reissue, and the authority to issue expired December 31, 
1838.* These notes were to be paid to such creditors of the 
government as would receive them at par, 7 and received in 
payment of all dues to the government, including payment 
for the public lands.' 

Under the authority of this act the secretary of the 
treasury issued "a little less than $2,000,000 at a nominal 
rate of interest (one-tenth of 1 per cent, per annum) ; nearly 
$3,000,000 at 3 percent. ; and the rest at 5 percent." * Dur- 
ing the year 1837/8, six out of ten millions of revenue were 

., p. IS. * 3tat*te at Large, VoL V, D.M. 

Section 1. See action of Senate on Benton'n motion to raine their denomination 
to $100, Debate*, VoL XIV, Part II, pp. 47-9; and debate in BOOM, pp. 1301-10. 

Sec.S. Sec.5. Sec. IS. - 

Sec. 6. Identical with similar provision.* in previous act*. 

Cambrelinc. in the BOOM. May 11. 183ft.-<?lo6, Twenty -fifth Concraa*. Sd So**, 

p. ass. 


paid in these notes, 1 and at the end of the year the situation 
was little altered. 

It was then proposed to grant to the secretary, within the 
time during which his authority to issue existed, the power 
to reissue notes redeemed, for the avowed purpose of supply- 
ing a medium in which public dues might be paid and of 
furnishing a substitute for the notes of the state banks which 
were still in a disorganized condition. 2 This proposition 
was opposed on the ground that such notes under power to 
reissue became "bills of credit," within the definition laid 
down by the Supreme Court in the case of Craig v. Missouri, 3 
and Briscoe v. Bank of Commonwealth of Kentucky ; * that 
the power to issue these had been deliberately withheld from 
Congress and should not be assumed, even when no purpose 
was manifested of making them a legal tender between pri- 
vate individuals. 5 These objections were overruled, however, 
and a bill granting to the secretary the power to reissue notes 
issued under the act of 1837 and paid into the treasury 
became a law May 21, 1838. 6 The conditions of the treasury 
and of the general circulating medium remaining substan- 
tially unchanged, the terms of the act of 1837, including 
the power of reissue, were extended to June 30, 1839, by an 
act 7 which became a law March 2, 1839. 8 

It was recognized that both fiscal and monetary objects 
were sought by the issue of these notes; and when in 1840, 

1 Globe, Twenty-fifth Congress, 2d Sess., pp. 303, 384. 

2 See Calhoun's remarks. Ibid., p. 386. 

3 4 Peters, 410. 
11 Peters, 257. 

6 See the debate in the House, Globe, Twenty-fifth Congress, 2d Sess., p. 369; and 
in the Senate, especially the remarks of Preston, of South Carolina, p. 388. 

* Statute* at Large, Vol. V, p. 228. The bill passed the House (108-99) May 16 
(Globe, just cited, p. 378), and the Senate (27-13) May 21 (p. 369). 

7 Which passed the House (102-88) February 18, 1839 (Globe, Twenty-fifth Con- 
gress, 3d Sess., p. 189), and the Senate, without division, February 28 (p. 204). 

6 Statutes at Large, Vol. V, p. 323. 


again on the recommendation of the secretary of the treas- 
ury, 1 it was proposed to extend the terms of the act of 1837, 1 
amendments were introduced providing that the bills thus 
authorized should bear interest at a rate not greater than 6 
per cent, at the discretion of the secretary, and be negotia- 
ble by indorsement only and subject to all the restrictions 
applicable to inland bills of exchange,' for the purpose of 
preventing their use as a general medium of exchange and 
avoiding their alleged unconstitutionally as bills of credit. 
Both amendments failed, however, and the bill became a law 
March 31, 1840, 4 extending the provisions of the act of 1837, 
modified only as to the time of redemption, to March 31, 
1841. Similar issues were resorted to in 1841,* 1842,* and 
1843, T and upon this method of borrowing reliance was 

I In a statement transmitted to the House by the president with a special mes- 
sage. Globe, Twenty-sixth Congress, 1st Sen., p. 206, 

Ibid., p. 285. 

See Mid., pp. 285-8, for filibustering tactics of the Whig* in opposition to the 
measure. The bill passed the House (110-66) March 27, the Senate on March 10 (ZS-). 
For text of law, see Statute* at Large, Vol. V, p. 370. Under this act the notes author- 
iced (15,000,000 in amount) were to be redeemed either at the end of a year or at any 
time within that period on sixty days' notice. The provisions of the act of 107 
apply in all other respects. 

February 15, 1841. Globe, Twenty-sixth Congress, 2d Bess., pp. 83, 10ft, 100. 113. 
ISO, 165; and Appendix, p. 6; Statute* at Large, Vol. V, p. 411. 

Globe, Twenty-serenth Congress, 2d Sess., pp. 102, 131, 153. 155, 160, 196; also 
Appendix, p. 23. This bill was introduced in accordance with the suggestion of 
the secretary of the treasury by Fillmore on January 5, 1842. He answered the consti- 
tutional argument by an appeal to Madison's action in signing the treasury note 
bills of 1812-15. The bill passed the House (12-W) on January 14, and the Senate 
(21-20) January 22, and became a law January 31. See Statute* at Larye, Vol. V, p. 40ft. 

' March 3, IMS. Statute* at Large, Vol. V, p. 614. An act had been passed April 
15, 1842 (Ibid., Vol. V, p. 474), providing that all notes preriotuly authorised and 
then outstanding and unredeemed should bear interest at 6 per cent. from time 
of becoming due until payment. This was thought an adequate provision against 
run on the treasury for their redemption. In his report for 1842, December 1ft. 
Secretary Forward advised that this provision apply to the note* issued under the 
act of August 31, 1842, and that the power to Usne be extended to July 1. 1*44. Oloft*. 
Twenty-seventh Congress, 3d Sess., Appendix, p. 46. A bill in accordance with 
these suggestions passed the House February 20 (111-51. p. 330), and the Senate 
March 2, without division (p. 3W). On p. 185 of the Appendix can be found a state- 
ment as to the amount and conditions of i 


placed in 1846 l and 1847, 2 when the treasury was pressed to 
meet the demands occasioned by the war with Mexico. 3 

Although no issue of notes was authorized during the 
session of Congress of 1843-44, interesting action was taken 
with regard to those already authorized. By an act of July 
21, 1841, 4 a loan of $12,000,000, reimbursable after three 
years from the following January 1, or at the will of the 
secretary after six months' notice, had been authorized, to meet 
the needs of the treasury and redeem outstanding treasury 
notes. At the time of the passage of the act of March 3, 
1843, there were still outstanding more than $11,000,000 in 
treasury notes, 5 of which $8,000,000 fell due before July 1 of 
that year. The loan was resorted to, and $7,000,000 in 
treasury notes were redeemed. Those still outstanding bore 
interest at 6 per cent, which was higher than the prevailing 
rate of interest. 6 The secretary of the treasury, Spencer, in 

This bill passed the House (118-46) July 15, 1846, (Globe, Twenty-ninth Congress, 
1st Sess., p. 1100), and the Senate July 18, without a division (p. 1115), and became a 
law July 22 (Statutes at Large, Vol. IX, p. 39). By it the president was authorized to 
issue treasury notes for such sums, not ezceeding $10,000,000 at any one time, as the 
exigencies of the government required, with power to reissue, under the restrictions 
and conditions of the act of October 12, 1837 (sec. 1) . By section 2 the president was 
authorized to issue, if he preferred, $10,000,000 of stock under conditions of act of 
April 15, 1842. Neither the stock nor the treasury notes were to bear interest greater 
than 6 per cent., nor be sold for less than par (sec. 3). 

2 January 28, 1847 .Statutes at Large, Vol. IX, p. 118. This was an elaborate bill 
containing within itself all the necessary provisions. By it an issue of $23,000,000 
was authorized, together with $5,000,000 under the act of July 22, 1846. It passed the 
House (166-22) January 21 (Globe, Twenty-ninth Congress, 2d Sess., p. 230), and 
the Senate (43-2) January 27 (p. 267). Notes authorized by this act were to be in 
denominations of $50 and over, redeemable at the expiration of sixty days' notice. 
They were to be paid to such creditors of the government as would receive them at 
par (sec. 4), and were to be "received in payment of all duties and taxes laid by the 
authority of the United States, of all public lands sold by said authority, and of all 
debts to the United States, of any character whatsoever, which may be due and pay- 
able at the time when said treasury notes may be offered in payment. And on every 
such payment credit shall be given for the '.amount of principal and interest which 
on the day of such payment shall be due," etc. 

s Of the notes issued between 1837 and 1850 over $50,000,000 were at 6 per cent., 
$5,000,000 at 5 per cent., and less than $5,000,000 at Vt of 1 per cent. See Hunter's 
speech in Senate, December 18, 1857, Globe, Thirty-fifth Congress, 1st Sess., p. 68. 

Statutes at Large, Vol. V, p. 438. See also pp. 473, 581. <s $11,656,387.45. 

Report of secretary of treasury for 1843, Globe, Twenty-eighth Congress, 1st 
Sess., Appendix, p. 4. 


order to redeem these, issued others of $50 bearing interest 
at .001 per cent, redeemable after a year, bat purchasable 
in coin at par on presentation. 1 For this the secretary 
claimed he found express authority in the act of 1837,' which 
he maintained was not in contravention of the constitution.' 
These issues having been called in question in the House of 
Representatives, the Committee of Ways and Means was 
instructed to inquire and report whether the notes issued by 
the Treasury Department, bearing a nominal rate of interest 
and convertible into coin on demand, were authorized by the 
laws and constitution of the United States. 4 On March 28, 
the committee reported that they were without authority of 
law, 1 a judgment ratified by the House when it accepted 
the report by a vote of 89-67.' 

Again a period of years was allowed to elapse without a 
resort to this method of borrowing money, and not until 
1857, under the pressure of the commercial crisis of that 
year, were short-time notes issued. All of the notes issued 
under the act of 1847 T were retired by 1850, there having 
been in that act ample provision for the funding ' of the 
notes then and previously authorized. The secretary of 
the treasury, Cobb, in his report for 1857, estimated that 
the receipts would exceed expenditures, but said that the 

I Note the difference between these and those of 1837, which bora the Mine rate, 
bat had no demand feature. 

*See. 8. "And the said secretary is further authorised to make purchases of 
aid notes at par for the amount of the principal and interest due at the timeuf par. 
chase of such notes," 

*"The authority ' to borrow money,' etc., (ton by the constitution, la it* terms 
comprehends every form of loan which Congress may think proper to prescribe; aad 
it is not easy to perceive how this express and unqualified grant of power eaa be 

limited or curtailed It is submitted that the government is respon*ible only 

for the use which it makes of the power to incur a debt, and not for the u*e or abase 
by the people of its evidences of indebtedness." Report above cited. 

Oboe, Twenty-eighth Congress, 1st Sess., p. 48. /**-. P- * 

Ibtd., p. 4eO.-See Report No. 879, Twenty-eighlh Congress, 1st Sees.. Boas* of 
Representatives. Compare KKOI, op. ctt., p. &S. 

T Except $300,000. 

Sections IS, 14 of the act of imi.-Statuta at Large, VoL IX. p. lla. 


financial revulsion which had caused the banks to suspend 
specie payment in October had also caused a large part of 
the dutiable merchandise to be stored without payment of 
duty, where it could remain three years. In the meantime 
he recommended that authority be given to issue treasury 
notes as the demands of the public service should require. 1 A 
bill similar to that of 1847 2 was immediately introduced into 
both houses of Congress, and very soon became a law. 3 

As in the case of previous issues, these notes, too, were to 
be paid to such creditors of the government as would receive 
them at par, and received in payment of all public dues. 4 

The whole amount of notes authorized by this act of 
1857 was issued, 6 and in 1860 there were still outstanding 
$19,690,500. In June of that year a loan of $21,000,000 
was authorized 6 for the purpose of redeeming the treasury 
notes still outstanding and replacing those which had 
been received into the treasury for public dues. Under 

i"The exigency being regarded as temporary, the mode of providing for it 
should be of a temporary character. It is therefore recommended that authority be 
given to the department by law to issue treasury notes for an amount not exceeding 
$20,000,000, payable within a limited time, and carrying a specific rate of interest, 
whenever the demands of the public service may call for a greater amount of money 
than shall happen to be in the treasury subject to the treasurer's drafts in payment 
of warrants." Report of December 8,1857; Globe, Thirty-fifth Congress, 1st Sess., 
Appendix, p. 6. 

2 Except that there was no provision for funding, and the method of issuing was 

3 December 23. Notes not to exceed $20,000,000 in amount, of denominations not 
less than $100, were authorized. They were to be redeemable one year from date of 
issue. The first issue of not over $6,000,000 should bear such interest as the secretary, 
with the approval of the president, should determine. The remaining issues were 
to be advertised for thirty days, and then exchanged for their par value in specie 
with such bidders as would make the exchange at the lowest rate of interest, not 
exceeding 6 per cent. Power to issue and to reissue within the limits of the amount 
authorized extended to January 1, 1859. Ibid., pp. 103, 154 ; Statutes at Large, Vol. 
IX, p. 257. 

* The provisions in this connection are identical with those of the act of 1847. 
'At various rates. See KNOX, op. cit., p. 71. 

June 22, 1860. Stock was to be issued at a rate of interest not greater than 6 per 
cent., for a time not greater than twenty nor less than ten ye&rs. Statutes at Large, 
Vol. XII, p. 79. 


authority of this act Secretary Cobb invited proposal* ' 
for a portion of the loan ; but before the time of payment 
arrived the critical political situation so affected the credit 
of the government that in his report of December 4, I860,* 
the secretary recommended the repeal of the act of June as 
to the amount not taken and the grant of authority to sub- 
stitute treasury notes.* A bill drawn in accordance with his 
recommendations 4 became a law December 17, I860.* 

The amounts' thus authorized were issued in January, 
1861. The following month a loan of $25,000,000 was 
authorized,' but it was taken so slowly and at such rates* 
as to demand supplementary measures ; and again, within a 
month,' the "Morrill tariff law" was enacted, embracing, in 
addition to revenue provisions, the authority to borrow $10,- 
000,000 by the issue either of bonds or of treasury notes, 
together with the power to substitute for any of the loans 
previously authorized notes which should be redeemable at 
any time within ten years from the passage of the act, and 
receivable in payment for all debts due the United States, 
and payable in all cases where creditors of the government 
should be willing to receive them. 10 With this issue closed 
the series of issues evoked by the crisis of 1857. 

i $10,000,000 at 5 per cent., September 8, 1800. 

* Qlobf, Thirty-sixth Congress, 2d Seas., Appendix, p. 8. 

* Based on the receipts from sales of public lands. 

He resigned December 10, 1800. The bill passed the House December 10 aad 
the Senate December 12. Ibid., pp. 45, 71. 

* Statute* at Large, Vol. XII, p. 21. The differences between this act and that of 
1857 are Tery slight. By it the power to issue and reissue extended to January 1. 1M> 
(Sec. 10). 

110,000.000, redeemable at the expiration of a year at rate* of interest tary- 
ing from to 12 per cent. KNOX, op. at., p. 77. 

i February ft, lt\.~Statute at Large, Vol. XII, p. 128. 

* $18,415,000 was the amount issued, at an arerage rate of only $83.08 en the $Mn. 

* March 2, 1861.-/bid ., p. 178. See also Globe, Thirty-sixth Congress. Id &**.. pp. 
898, 1010, 1065, 1201, for the debate in the Senate and House and passage of the bilL 

iThe power to issue was limited to June 30, 1882, and nothing was said of Ik* 
power to reissue. See KMOX, op. cifc, p. ?. 


When Congress reassembled in special session on July 
4, 1861, the condition of war had supervened. Mr. Chase 
had assumed the Treasury portfolio and transmitted his 
report to Congress on the opening day of its session. 1 He 
reported that, under the act of March 2, $4,901,000 in treas- 
ury notes had been disposed of in April at or above par, 
while $2,584,550 had been issued after that time either at 
par in exchange for coin or in payment to public creditors. 
He estimated the sum required for the fiscal year to 
be not less than $318,000,000, of which more than 
$12,000,000* would be needed to provide for the treasury 
notes "due and maturing." Of this amount he thought 
$80,000,000 should be provided by taxation, the rest by 
loans such as would appeal to the general mass of the 
people, as "in a contest for national existence and the 
sovereignty of the people it is eminently proper that the 
appeal for the means of prosecuting it with energy to a 
speedy and successful issue should be made, in the first 
instance at least, to the people themselves." Therefore, in 
order to appeal to the people and make the burden as light 
because as universal as possible, he recommended a loan of 
$100,000,000 in treasury notes or exchequer bills, bear- 
ing a yearly interest of 7.3 per cent, (one cent a day on 
$50), to be paid half-yearly, and redeemable at the pleasure 
of the United States after three years from date of issue. 
These notes were to be issued in sums of $50, $100, $500, 
$1,000, and $5,000. 8 

Besides these, the secretary proposed the issue of $50,- 
000,000 in small denominations, $10, $20, $25, payable a 
year from date, bearing interest at 3.65 per cent., 4 or, if 
more convenient, made redeemable in coin on demand, with- 

J Olobe, Thirty-seventh Congress, 1st Sess., Appendix, p. 4. 2 $12,639,861 .64. 

3 With the amount of interest for specified periods engraved on the back of 
each note. 

* To be exchanged for those bearing 7.3 per cent. 


out interest. "In either form, 11 raid the secretary, "treasury 
notes of these smaller denominations may prove very useful 
if prudently used in anticipation of revenues certain to be 
received. The greatest care will be requisite to prevent the 
degradation of these issues into irredeemable paper currency, 
than which no more certainly fatal expedient for impov- 
erishing the means and discrediting the government of any 
country can be devised." ' 

A bill embodying these suggestions passed the two houses 
of Congress after slight discussion, and almost unanimously, 
becoming a law July 17.' By it a loan of $250,000,000 was 
authorized in the form of bonds* or treasury notes' at the 
discretion of the secretary. 

Attention is particularly called to the second alternative 
suggested by the secretary ; for he was also given power to 
issue in exchange for coin, or pay for salaries and other dues 
from the United States, treasury notes to an amount not 
greater than $50,000,000, of a smaller denomination, 4 
either bearing interest at the rate of 3.65 per cent, and 
payable a year from date of issue,* or not bearing interest, 
and jHiyiihle on demand* power to issue and to reissue being 
granted up to December 31, 1862. 

It is an indication of the haste with which the act was 
passed that nothing was said in it about receivability for 

I 76id., pp. 61, 128; Statute* at Large, Vol. XII, p. SO. See "Study of Demand 
Note* of 1881," R. M. BUECKBMUDOB, Hound Currency, Vol. V. p. 30. 

* Coupon, or registered, to bear interest not creator than 7 percent.. payable 
emi-annnally, redeemable after twenty yean. 

>Of denomination not less than ISO, payable three yean from date of law* 
with interest at 7.3 per cent, per annum. 

Not less than 910, according to this act, reduced to f& by the act of August ft. 

Exchangeable in rams of $100 for the non-interest-bearing note*. 

Beside* these opportunities for choice as to the form of the obligation i 
would issue, the secretary was authorised to issue twenty millions, in raca denomi- 
nations as he saw fit, in notes payable within twelre month*, bearing Inure* at 
rate not greater than 6 per cent. 


public dues, and this quality was therefore bestowed by a 
supplementary act of August 5. 1 

It appears, then, that up to this time, on five occasions, 2 
the quality of being receivable in all payments to the gov- 
ernment had been bestowed upon notes issued by the gov- 
ernment. In each case the notes had been likewise payable 
to such creditors as would voluntarily receive them. These 
notes had varied widely in character, from true exchequer 
bills of large denomination, bearing interest, to notes of 
small denomination, bearing a nominal rate of interest or 
none at all. Resort had been had to these last on one occa- 
sion, when all other resources had seemed exhausted, at the 
close of the second war with England. Here, at the begin- 
ning of another war, before any other resources had been 
tried, resort was had to non-interest-bearing notes wholly 
adapted to use as a medium of exchange. 3 

With the issue of the legal-tender notes of the war is reached 
the point at which interest in the whole subject culminates. 
No precedent for such notes could be found during the life of 
the United States under the constitution. Their issue 
brought immediately to the front serious questions of con- 
stitutional power, as well as of policy, expediency, and 
national honor. It is impossible to enter upon a discus- 
sion here of the fiscal operations of which these issues were a 
part; 4 and only so much of the history of these notes will be 
narrated as is found necessary for the purpose of this study. 

1 Globe, Thirty-seventh Congress, 1st Sess., pp. 219, 268; Statutes at Large, Vol. 
XII, p. 313, sec. 5. By section 3 of this act the denomination was reduced to $5. By 
the act of March 17, 1862, these notes were made a legal tender. Globe, Thirty- 
seventh Congress, 2d Sess., pp. 1116, 1117, 1165 ; Statutes at Large, Vol. XII, p. 370, sec. 
2. An additional issue of $10,000,000 had been authorized February 12, 1862. Ibid., 
p. 338. 

21812-15; 1837-43; 1846-47; 1857; 1861. 

3 1815. In 1841, notes bearing but a nominal rate had been issued, but their issue 
had been disapproved by Congress. 

* For the history of these transactions see Report of the Monetary Commission of 
the Indianapolis Convention (1898), pp. 398 f. 


For the sake of completeness, however, the various act* under 
whi.-h legal-tender notes were authorized will be described. 

In his report to Congress tt the opening of the session in 
1861' Secretary Chase submitted estimates for the continu- 
ance of the war, which he hoped might be terminated the 
following summer. Various plans were proposed,' but no 
hint of the possibility of resorting to government issues 
which would be made a tender in private transactions was 
found in this report. 

Of the issues authorized by the act of the previous July 
17, $21,165,220 had been put out in denominations of $5, 
$10, and $20, which the secretary characterized as "a loan 
from the people, payable on demand, without interest." 
These notes, with some exceptions, circulated freely with 
gold, and were redeemed in gold at the treasury until the 
suspension of specie payments.' This event occurred on 
December 28, 1861, and on the 30th Mr. Spaulding intro- 
duced into the House of Representatives a bill authorizing 
the issue of demand notes which should be a full legal 
tender. 4 This was done under the plea of the absolute 
necessity of the measure. It was claimed that neither a 
banking system such as the secretary proposed nor the 
system of taxation which had to be developed to meet the 
emergency of war could be created without great delay; 
and the extreme measure of a legal-tender paper money was 
declared by its advocates the only adequate provision for 
the exigency then facing the government 

I December 9, 1961. Globe, Thirty-serenth Congress, 2d Bess. , Appendix, p. 9. 

*The issue of circulatory notes to replace the note* of state banks. Oat of thes* 
suggestions crew the national banking system later erected. 

* KNOX (op. ei'l., p. 90) discusses these notes, and declares them to hare bMO 
reluctantly received. BucEENRlDOB (in the study cited above, p. 148) shows Uw 
contrary to hare been generally true. See also report of Secretary Chase for IMS. 
Globe, Thirty -seventh Congress, 3d Sess., Appendix, p. 90; ScBtrcmu*. Tke U/t amd 
Public .Services of Salmon Portland Chtue, chap. XXVII. 

Globe, Thirty-seventh Congres*. 2d Sess., p. 4B. The bill was known a "Hoo"* 
Bill 240," "To authorise the issue of United States notes, and for the funding and 
redemption thereof." 


To discuss the necessity of this measure is to weigh it in 
connection with the whole fiscal policy of the secretary. 
This has recently been done by one having access to valuable 
authorities, with the following result : * 

"In examining the conditions under which the United 
States notes were issued, we have seen that .... it was the 
temporary deposits and certificates of indebtedness, and not 
the legal-tender paper long delayed in issue, which tided the 
government over the trying period of February, 1862, and 
the following weeks; that the entire issue of legal-tender 
notes bore a very small and unimportant proportion to the 
total war expenditures; that Secretary Chase and Congress 
made grave mistakes in their policy in taxation and the sale 
of bonds; and that the plans of bankers and of the minority 
of the Ways and Means Committee, which might have pre- 
vented this disastrous step, were proposed and urged upon 
the government." 

In answer to the argument of necessity was advanced 
the argument of lack of power. This had, of course, been 
anticipated, and the opinion of the attorney-general had 
been sought and was quoted by Mr. Spaulding in his exposi- 
tion of the measure. 2 This opinion must be admitted to be a 
feeble support, amounting merely to the statement that there 
was no prohibition in the constitution, which all knew, and 
the inference that a failure to prohibit amounted to a per- 
mission which was contrary to all canons of interpretations. 
The opinion of Secretary Chase was also sought and obtained, 
sustaining the constitutionality of the measure. 3 

The measure was pressed as a war measure, a "measure 
of necessity, not of choice," 4 to meet the extraordinary needs 

ID. C. BARRETT, "The Supposed Necessity of the Legal-Tender Paper," Quar- 
terly Journal of Economics, May, 1902. 

2 January 25. Globe, Thirty-seventh Congress, 2d Sess., p. 525. 

3 Letter from Secretary Chase to Committee of Ways and Means. Ibid., p. 617. 
* See Mr. Spaulding's speech. 


of extraordinary times the only remaining resource after 
all others had been exhausted. The power to issue such 
notes was claimed to be authorized first as an implied pap*! 
because it furnished a means toward the exercise of the 
powers "to raise and support an army," "to provide and 
an i in tn in a navy," and to regulate the value of coin, 1 
expressly conferred. 

But in addition to the argument drawn from the clause 
granting the implied powers, this was claimed to be justified 
by the simple fact of sovereignty, the broad claim which 
afterward proved BO effective* being now put forth. " I am 
here," argued Mr. Bingham, "to assert the rightful authority 
of the American people as a nationality, a sovereignty under 
and by virtue of the constitution. By that sovereignty, 
which is known by the name of 'We, the people of the 
United States, 1 the government of the United States has 
been invested with the attribute of sovereignty, which is 
inseparable from every sovereignty beneath the sun the 
power to determine what shall be money that is to say, 
what shall be the standard of value, what shall be the 
medium of exchange for the purpose of regulating exchange 
and facilitating all commercial transactions of the country 
and among the people. If the government of the United 
States had not this power, it would be poor indeed ; it would 
be no government at all."* Mr. Pike, however, went so far 
on the other side as to admit that the exercise of this power 
was plainly an excess of power under the constitution ; but 
he contended that it was justified by the existing emergency, 
which he found analogous to a case of fire rendering lawful 

I " In regulating the ralue of coin, either foreign or domestic, Congress may 
provide that gold and niln-r hall be of no greater ralue in the payment of rfebu 
within the United State* than the treasury note* issued on the credit of the gov*ra- 
ment which stamps such coin and fixes its ralne." /6id., p. 824. 

*In Justice Gray's opinion in Juillard r. Greenman, below, p. 133. 

See Bingham's speech, February 4. Olobe, Thirty-seventh Congress, fti Seam, 
p. 636. 


a destruction of property under ordinary circumstances wholly 
illegal. 1 

The argument against the legitimacy of the exercise of 
the power thus attempted for the first time was perhaps 
best set forth in the House by Pendleton. 2 He referred first 
to the uninterrupted and consistent interpretation put upon 
the constitution by Congress in never even considering the 
exercise of such a power: "Not only was such a law never 
passed, but such a law was never voted on, never proposed, 
never introduced, never recommended by any department of 
the government ; the measure was never seriously considered 
in either branch of government." Not only was there no 
grant of such power, but the omission was a deliberate 
and purposeful omission, because it was intended that neither 
in the states nor in the federal government should such a 
power reside. 

The bill passed the House on February 6, 3 and was intro- 
duced with amendments in the Senate the following day, 
when Mr. Fessenden, chairman of the Finance Committee, 
presented the measure, with a letter from the secretary of 
the treasury urging immediate action. The important 
amendments proposed by the Committee on Finance were a 
provision for the collection of import duties in coin, *'. e., 
inserting in the provision by which these notes, as in the 
case of former issues, should be receivable for all public 
dues, an exception in favor of import duties ; a similar excep- 
tion in the case of public creditors, requiring the payment of 
"interest on bonds and notes" to be in coin; and the bestowal 
of power on the secretary to sell at any time 6 per cent, 
bonds at their market value to secure coin for the payment 

1 See Pike's speech, February 5. Globe, Thirty-seventh Congress, 2d Sess., p. 658. 

2 January 29. Ibid., p. 549. But see arguments of Morrill and Conkling, pp. 629-35. 

3 By a vote of 93 to 59. All the Democrats and such Republicans as Morrill, 
Conkling, Pomeroy, Lovejoy, Rollins, Thomas of Massachusetts, etc., voted against 
the measure. Ibid., p. 695. 


of the interest on the public debt 1 The Finance Committee 
did not recommend an amendment striking out the legal- 
tender clause, but this was soon introduced on the floor of 
the Senate.' After a debate similar to that in the House, 
however, the amendment was lost by a vote of 17 to 22 on 
February 13.' 

Both Mr. Sherman and Mr. Bayard referred to the 
probability of interpretation by the Supreme Court. ** When 
I feel so strongly the necessity of this measure, I am con- 
strained to assume the power and refer our authority to 
exercise it to the court," said Mr. Sherman. " The thing is 
to my mind so palpable a violation of the federal constitu- 
tion," said Mr. Bayard, " that I doubt whether in any court 
of justice in the country having a decent regard for its own 
respectability you can possibly expect that this bill .... 
will not receive its condemnation as unconstitutional and 
void as to this clause." The bill became a law February 25, 
1862.* By it the secretary was authorized to issue on the 
credit of the United States $150,000,000 in non-interest- 
bearing notes, of such denominations, not less than $5, as he 
saw fit, $50,000,000 to replace the demand notes outstanding. 
These notes were to be " receivable in payment of all taxes, 
internal duties, excises, debts, and demands of every kind 
due to the United States, except duties on imports, and of all 
claims and demands against the United States of every kind 
whatsoever, except for interest on bonds and notes, which 
shall be paid in coin, and shall also be lawful money and a 
legal tender in payment of all debts, public and private, within 
the United States, except duties on imports and interest as 
aforesaid." Power to reissue as the public interest might 

i Sea Fesseoden's speech, February !S.-/6id., p. 70S. Mr. Feawadw did not pot 
his argument on the constitutional ground, but on tho ground that it wa a coofe*- 
ion of weakness, " bad faith, bad morals," and that the lose would fall chiefly oa 
the poor. 

1 IbuL, p. 787. * Ibid., pp. 791. 7. MO. *StatuU at Lttryr, Vol. XII. p. ML 


require was granted. 1 Holders of the notes were authorized 
to deposit them in sums of $50, and to receive certificates of 
deposit, in exchange for which would be given 6 per cent, 
compound-interest-bearing bonds, redeemable after five and 
payable after twenty years. 2 

On March 17 an act was signed making the demand notes 
of the acts of July 17 and August 5, 1861, and February 
12, 1862, a legal tender, so that they were both receivable 
for import duties and a legal tender. 3 

It will be remembered that $50,000,000 of the $150,000,- 
000 authorized were to replace the $50,000,000 of demand 
notes authorized the previous summer. 4 On June 7, 1862, 
the secretary reported to the Committee of Ways and Means 
that nearly all the demand notes were held at a premium 
because of their availability for the payment of duties; that 
the legal tenders had been kept at or near par by the 
provision for funding them ; and that the exigencies of the 
public service required the issue of another $150,000,000, 
part of which, he thought, should be in lower denomina- 
tions than $5, in order to replace the issues of state banks. 5 

iSec. 1. 

2 Sec. 3. Bonds of this kind were authorized to the amount of $500,000,000, 
to be disposed of by the secretary at their market prices in coin or for treasury 
notes, and to be exempt from state taxation. By the same act provision was made 
for the application of coin received for import duties as a special fund to the pay- 
ment of interest on the public debt, and to the creation of a sinking-fund for the 
gradual extinction of the debt. Sec. 5. 

3 Statutes at Large, Vol. XII, p. 370. 

Or, rather, $60,000,000, since $10,000,000 additional were authorized by the act of 
February 12, 1862. Ibid., p. 338. 

5 " I am aware of the general objections to the issue of notes under $5, and con- 
cede their cogency. Indeed, under ordinary circumstances they are unanswerable ; 
but in the existing circumstances of the country they lose most if not all of their 

force It may be properly further observed that since the United States notes 

are made a legal tender and maintained nearly at par with gold by the provision for 
their conversion into bonds bearing 6 per cent, interest, payable in coin, it is not 
easy to see why small notes may not be issued as safely as large ones. Resump- 
tion of payments in specie can be more certainly and early effected, and with far less 
of loss and inconvenience to the community, if the currency, small as well as large, 
is of United States notes, than if the channels of circulation are left to be filled up 
by the emissions of non-specie-paying corporations, solvent and insolvent." Globe, 
Thirty-seventh Congress, 2d Sess., p. 2768. 


A bill introduced into Congress in accordance with the 
secretary's recommendation jwased both houses 1 and became 
a law July 11, 1862.* By it was authorized the iasoe of 
$150,000,000 in notes similar to those authorized by the act 
of February 25, except that $35,000,000 might be of denomi- 
nations lower than $5, but not lower than $1. Like the 
former issue, these were to be receivable in all payments to 
the government, except for import duties, and in all payment* 
by the government, except interest on the public debt, and 
were " lawful money and a legal tender in payment of all 
debts, public and private, within the United States, except," etc.* 
This was soon followed by an act 4 prohibiting the circula- 
tion of notes intended to circulate as money of lower denomi- 
nation than one dollar issued by "any private corporation, 
banking association, firm, or individual." Such notes had 
been issued to supply the gap left by the withdrawal of the sub- 
sidiary silver from circulation, when the legal-tender paper 
had depreciated to a point low enough to produce this effect* 

i It passed the House Jane 24 by a rote of 76 to 47, and the Senate July 2 by a voie 
of 23 to 13 (ibid., pp. 2889, 2903). In the House an amendment to strike oat UM 
legal-tender provision was lost (Jane 23, p. 2889), and in the Senate an ameadsiMcil 
introduced by Mr. Sherman taxing state banks 2 per cent, on the amount of their 
notes in circulation was voted down (10-27, July 2, p. 3071). That it was a depar- 
ture from the pledges implied, if not expressly given, during the debate on the flr*t 
legal-tender act was not denied. Only Mr. Stevens, chairman of the Committee of 
Ways and Means, had admitted the possibility of further issues. Mr. Spaulding. 
chairman of the sub-committee and " father of the legal tenders." admitted the 
desperate nature of the situation. " Paper credit in some form most be braed 
daring the next fiscal year to a very large amount. However much we may deprecate 
it, this will be an imperative necessity which we cannot avoid. However much 
this may be a departure from sound business and financial principle* pplieabte to 
times of peace, we must not shrink from the responsibility which is fixed upon as 
in the execution of this war." Ibid., p. 2767. 

* Statute* at Large, Vol. XII, p. 592. 

Sec. 1. There wore likewise similar provisions for deposit and funding. 

July 17, 1862. Ibid., p. 592; Globe, Thirty-seventh Congress, td Sssrn^ pp. MB. 
3409. The total issue of postage currency, which commenced August 3. UC. aad 
ended May 27, 1863, was$21,215,635.-Kxoi, op. cit, p. 104. 

In a silver dollar there were 371.25 grains of fine silver: in two half -dollar*, four 
quarter-dollars, or ten dimes there were only 3454 grains. At the ratio at wttie* gold 
was selling in 1862, a silver dollar was worth 104 cents in fold, two half-dollar* but 
97. LAGOHIJN, op. cit, Appendix II, P. 


This act likewise authorized the use of postage stamps for 
"payment of all dues of the United States less than $5," and 
their receipt in exchange for United States notes for such sums. 

On January 17, 1863, 1 by a joint resolution, the issue of 
$100,000,000 more of legal-tender non-interest-bearing notes 
in denominations not less than $1 was authorized for the 
purpose of paying the army and navy; and by an act of 
March 3, 1863, 2 $150,000,000, including the $100,000,000 3 of 
the joint resolution, similar to those of the first legal-tender 
act, except as to denomination, were provided for. By this 
act a substitute for the postage currency was provided,* 
but these notes thus authorized were receivable only for 
public dues, excepting import duties, to the amount of $5, 
and were not a tender in private transactions. 

By this act, too, a new kind of treasury note was author- 
ized with the legal-tender quality, i. e., $400,000,000 in notes, 
payable at such time, not exceeding three years from date 
of issue, as the secretary should find beneficial, bearing 
interest at a rate not greater than 6 per cent., the interest to 
be paid in "lawful money" of denominations not less than 
$10, to be a legal tender, as in the case of United States 
notes, "for their face value, excluding interest." They were 
exchangeable, together with accumulated interest, for United 
States non-interest-bearing notes. 

On June 30, 1864, 5 $200,000,000 in interest-bearing 6 notes 
were authorized, to be a legal tender for their face value, 
exclusive of interest. 7 On January 28, 1865, this amount 

i Statutes at Large, Vol. XII, p. 822. Ibid., p. 709. Sec. 3. 

* To the amount of $50,000,000. Sec. 4. The total amount of issues and reissues 
under this and the act of July 17, 1862, was $368,720,074. KNOX, op. cit., p. 104. These 
notes were exchangeable, together with accumulated interest, for the non-interest- 
bearing legal tenders. 

Statutes at Large, Vol. XIII, p. 218. 6 At a rate not greater than 7.3 per cent. 

7 And such of them as shall be made payable, principal and interest, at maturity 
shall be a legal tender to the same extent as United States notes for their face values, 
excluding interest, etc. 


was raised to $400,000,000 by the last act of the war confer- 
ring power to issue legnl -tender government notes.' 

A word most be given, also, to a form of notes having 
the peculiar quality of being receivable for import duties, 
whu-h was authorized by the act of March 3, 1863.' Bj 
section 5 of that act, the secretary of the treasury was given 
power to receive deposits of gold coin and bullion, for which 
certificates in denominations of not less than $20 should be 
issued, which should " be received at par in payment for duties 
on imports." These certificates were, of course, wholly differ- 
ent from the notes previously described, being evidences of 
value received, rather than general promises to pay, given 
by the government 

From this statement of the legislation it appears that 
$450,000,000* of United States legal-tender notes, besides 
fractional currency to the amount of $50,000,000, was 
authorized during the years of the contest On January 30, 
1864, notes of this character to an amount equal to $449,- 
338,902 had been issued. 4 By July 11 they had depreciated 
until $100 in notes was worth only $35.09 in gold/ Their 
use had been understood and declared to be a war measure, 
forced by direst necessity. With the cessation of the war 
and the lightening of the apparent necessity came movements 
looking toward a reduction of the amount of outstanding 
notes. A sketch of the legislation looking to this reduction 
will not be out of place. 

By an act of April 12, 1866,' it was provided that during 

I January 28, 1865.-/6id., p. 425. 

J /bid.. Vol. XII, p. 709. The use of these was discontinued January 1. 1879. by 
executire order. United Stale* Treasury Circular No. 123, p. 11: "Information R- 
peetinc United States Bonds, Paper Currency," etc., July 1. UK. 

$30,000,000 being renewed for temporary loan* by the Mi of July 11. UBS, see. X 

United State* Treasury Circular No. 123, p. 10. 

Sr ACLDIXO, Hittont of the Legal Tender Paper Currency of Uu Orsn* MHitm 
(Buffalo, 1MB), p. 208; Report of Monetary CommtMion, p. 415. 

* Statute* at Large. Vol. XIV, p. SI. 


the next six months United States notes might be retired to 
the extent of $10,000,000; after that time not more than 
$4,000,000 a month should be withdrawn. This act remained 
'in force until suspended on February 4, 1868, 1 after the 
withdrawal of $44,000,000 of notes. 2 

By an act of January 14, 1875, 3 provision was made for 
the resumption of specie payments and the reduction of the 
amount of outstanding legal-tender notes; but the process 
was again stopped on May 31, 1878, by legislation, which 
required that the notes once redeemed should be reissued/ 

Brief notice only will be given to other forms of notes 
which have possessed the power of receivability to a greater 
or less extent. The gold certificates authorized by the act 
of March 3, 1863, and suspended in 1879, were revived by an 
act of July 12, 1882, by which the secretary of the treasury 
was " authorized and directed " to receive gold coin and issue 
certificates "in denominations of not less than $20 each, 
corresponding with the denominations of the United States 
notes," which "shall be receivable for customs, taxes, and 
all public dues, and when so received, may be reissued." 1 
By the act of February 28, 1878, which " remonetized " 
the standard silver dollar, 6 were authorized similar deposits 
of silver bullion, and the issue of similar certificates, receiv- 
able in like manner with the gold certificates. 7 Lastly, by 
an act of July 14, 1890, treasury notes possessing the full 

1 Statutes at Large, Vol. XV, p. 34. 

2 United States Treasury Circular No. 123, p. 10. In 1873, a large proportion of 
these canceled notes were reissued. 

3 Statutes at Large, Vol. XVIH, p. 296. 

* Ibid., Vol. XX, p. 87. Nothing was said of their being legal tender after reissue. 
But see the discussion of Juillard v. Qreenman, below, p. 133. 

B Statutes at Large, Vol. XXII, p. 162, sec. 12. 

Above, p. 99; Statutes at Large, Vol. XX, p. 25. 

7 Sec. 3. The denomination was to be not lower than $10. " Such certificates 
shall be receivable for customs, taxes, and all public dues." 


legal-tender quality were again authorized. By that act ' tho 
secretary of the treasury was directed to purchaite each 
month 4,500,000 ounces of fine silver at the market price*, 
and pay for it with treasury notes redeemable on demand in 
coin, which* "should be a legal tender in payment* of all 
debts, public and private, except where otherwise expressly 
stipulated in the contract,' and shall be receivable for cus- 
toms, taxes, and all public dues." 4 

The legislation of February 25, 1862, was distinguished 
from all measures previously enacted for the purpose of 
authorizing government notes by the words "shall be lawful 
money, and a legal tender in all debts, public and private, 
within the United States." Previous issues had been made 
receivable in payments to the government and payable to all 
creditors of the government who would receive them volun- 
tarily at par. With the exception of the single class of 
revenues, import duties, and the single class of creditors, 
holders of the public debt, the holders of these notes were 
to have the legal right of passing them in all transactions to 
which the government was a party. Members of the army, 
the navy, the civil service, contractors, were to receive them 
for their services and goods; and to all collectors of the 
revenue, with the one exception mentioned, could they be 
paid. The question at once arose as to the revenues of the 
states. Did Congress intend to require the officers of the 
separate commonwealths to receive them ? Or give to the 
citizen the right to use them in settling with his local govern- 

t Ibid., Vol. XXVI, p. 289, sec. 2. 

* Not Appendix II, Specie Contracts, below, p. 157. 

* No greater or less amount of these note* was to be onutaodin* at any USB* 
than the cost of the silver bullion and the standard silver dollar* coined tram it. 
The authority for the purchase of silver under this act was revoked Novessjkflr It 

Statelet at Large, Vol. XXVIII, p. 4. A portion of the act of 1MO wms iifttitt 
November 1, 1KB, when it wa< declared to be tho policy of the United S**U"lo 
maintain the equal power of every dollar coined or issoed by the United State* U Ue 
market or in the payment of debts." 


merit ? Did ; ' debts public ' ' include state taxes ? The question 
as to whether the act was intended to include these involun- 
tary obligations to the state preceded any questions of power 
to do so, and was answered in the negative by the Supreme 
Court in 1868, 1 so that the question of power to include 
them did not have to be raised. The intention to exclude 
these particular obligations was found expressed in the por- 
tions of the act in which provision was made for obligations 
to the federal government, showing that "debts" were to be 
understood as voluntary obligations, arising out of contract. 2 

But not only was the policy inaugurated by this act with 
regard to creditors of the government wholly novel ; never 
had the government ventured to include transactions between 
private individuals in the list of those in which its notes 
were to pass. As has been seen, coin had been made a legal 
tender, and Congress had been given express power to pass 
bankruptcy laws; 8 with these exceptions control over con- 
tracts had been held to lie wholly within the realm of state 

The question arose as to the effect of the act on so-called 
specie contracts,* i. e., contracts in terms not simply of money 
units, but of specific kinds of coin. This question, together 
with that of the power of Congress in the whole matter, came 
before the state courts within a short time after the passage 
of the act, 5 but was brought before the Supreme Court and 
there settled only in 1868, 6 when again, not the power 
of Congress, but the application of the act, was limited. It 
was then decided that such contracts were not within the 

1 Lane County v. Oregon, 7 Wallace, 71. 

2 This interpretation was pnt upon the act in 1862 by Justice Field, then chief 
justice of the supreme court of California, 20 Cal. 350. 

3 Constitution of the United States, I, 8, 4. 

* See Appendix II for note on specie contracts ; below, p. 157. 

& See Appendix I for note on decisions of state courts ; below, p. 156. 

Bronson v. Eodes, 7 Wallace, 229. 


meaning of the act, 1 and contracts for coin were treated M 
contracts for bullion, which might be enforced in the terms 
of the contract, the money terms being taken as descriptive 
of weight and fineness simply.* 

By these two important decisions the application of the 
act of February 23, 1802, had been successively limited in 
application. The question of constitutional power within its 
scope had not, however, been determined by the final tri- 
bunal. A large majority of the commonwealth courts had 
upheld it* within the narrow limits within which the Supreme 
Court decisions had confined its aerations, as well as sus- 
tained its application to a larger range of transactions. A 
decision adverse to the validity of the act arrived at by the 
Kentucky court of appeals' had brought the question before 
the Supreme Court of the United States, and, after argument 
and re-argument, the court finally handed down its opinion 
in February of 1870, in a decision adverse to the power 
claimed by Congress.* 

In arriving at this conclusion, the distinction was drawn 
between contracts entered into before the passage of the act 
and those of a subsequent date, and the question arose in this 
case as to the application of the act to the former of these 

) It was argued that, since import duties were to be paid in coin, coin contracts 
most hare been excluded from legislation, which would otherwise hare rendered UMSB 

'The judgment being entered In the kind of dollars named in the contract, 
interest would be required in the same form. " Such a contract is in legal import 
nothing else than an agreement to delirer a certain weight of standard gold, to be 
ascertained by the count of coins, each of which is certified to contain a definite 
proportion of the weight. It is not distinguishable in principle from a contract to 
deliTer an equal weight of bullion of equal fineness " (p. 250). Then is great force 
in the reasoning adduced in the dissenting opinion of Justice Miller, that alleoo- 
tracts in terms of dollars should be treated alike, since prior to the act under con- 
sideration the legal import was the same. See, also, Butler r. Horwita, 1 Wallace, 
288, and Trobilcock v. Wilson, 12 Wallace, 687. 

>See Appendix I, p. 156. Griswold r. Hepburn. 2 Dural <Ky.). 28. 

This question was first argued before the Supreme Court at the Ifecoia bur term. 
1867 ; it was reargued in December. IMS. The opinion was handed down in February 
1870. Hepburn r. Qriswold. 8 Wallace, p. 60S. 


two classes. The court held that the clear intent of the act 
was manifested to include prior contracts, and, so far, was an 
excess of power under the constitution, and therefore void. 

Interest in this decision is quickened by the fact that the 
chief justice who handed down the opinion of the court was 
identical with the secretary of the treasury who permitted, 
if he did not urge, the measure. A comparison of the firm 
and unwavering argument of the judge is in marked contrast 
with the somewhat uncertain statement of the secretary. 1 
It gains an added interest by reason of its futility as an 
effort to set right some of the unfortunate effects of the 
policy of the government in monetary matters. It was a 
brave, if futile, effort to correct as judge blunders made as 

The argument of the majority 2 may be briefly stated as 
follows : Every contract for money units made before the 
passage of the act was, in legal import, a contract for coin. 
These notes were liable to depreciation, and in proportion 
to their depreciation their enforced receipt was an impair- 
ment of the contract and contrary to justice and equity, 
and could be accomplished only if the power was plain. 
It was not claimed that the power was expressly granted, 
and so the definition of the implied powers given in 
McCulloch v. Maryland was drawn upon: "Appropriate, 
plainly adapted to the end sought ; not prohibited, but con- 

1 The provision making the United States notes a legal tender has doubtless 
been well considered by the committee, and their conclusion needs no support from 
any observation of mine. I think it my duty, however, to say that in respect to this 
provision my reflections have conducted me to the same conclusion they have 
reached." Chase's letter, January 29, 1862, quoted by SPACLDINQ, op. cit., p. 45; 
above, p. 116. 

2 The majority consisted of Chief Justice Chase and Justices Nelson, Clifford, 
Grier, and Field. Justices Miller, Swayne, and Davis dissented. Justice Grier was 
forced by ill-health to resign between the date on which the decision was ordered 
and that on which it was handed down. Nelson, Grier, and Clifford were already 
on the bench when Lincoln became president. Field, Chase, Swayne, Miller, and 
Davis were his appointees. HAET, Life of Salmon Portland C/icwe, American States- 
man Series, p. 325. 


sistent with the letter and spirit of the constitution." The 
court held that the power to bestow the legal-tender quality 
upon notes was not incident to the coinage power, nor iden- 
tical with the power to issue notes. To sustain this conten- 
tion, reference was made to the power to issue notes possessed 
by the Continental Congress, which had never claimed the 
power to make those notes a legal tender. The power waa 
declared to be no more incident to the power to carry on 
war than to any other power involving the expenditure of 
money. It was asserted that the legal-tender quality had 
not as a matter of fact affected the value of the notes, as 
was shown by the circulation of notes not possessing that 
quality ; and, since it impaired the obligation of contracts, 
it was contrary to the spirit of the constitution, as mani- 
fested in the prohibition laid on the states' and in that con- 
tained in the fifth amendment* 

It is interesting to note that the minority did not deny 
that the effect of the act was to impair the obligation of 
contracts, which they held, not being prohibited to Congress, 
was within its competence. They maintained that this power 
to bestow the legal-tender quality upon notes was clearly 
incident to the power to borrow money, to raise and support 
armies, etc. ; and disputed the truth of the history of the 
legal-tender notes as stated in the majority opinion. 

The failure of the minority to advance the argument that 
the obligation of the contract was an obligation to pay in 
what was lawful money at the time of payment, and so waa 
not impaired, is striking, because this had been advanced 
with great force in the state courts,' and was afterwards 
advanced and approved by the majority in overruling the 

1 1, 10, 1. 

* " Nor shall any person be deprirod of life, liberty, or property without dw 
pcocees of law." 

8ee Local Tender Cases, 52 Pa. St., 9; Oriswold r. Hepborn. 2 Daval (Ky.), 
,'dlssenting opinion). 


decision now being considered. 1 At this time not even 
those who sustained the power were willing to base it, even 
indirectly, on the ancient doctrine of prerogative. 

The act was thus held to be void as to contracts entered 
into before the date of its passage. The decision, however, 
failed to receive general acquiescence. The material and 
corporate interests involved were, of course, enormous ; 2 there 
was, too, a certain patriotic sentiment for the paper money 
with which the war had been fought out ; the administra- 
tion, 3 Congress, and popular prejudice, all were opposed to 
the court; and its position was one peculiarly adapted 
to obtaining a reconsideration. The court had consisted, 
when the decision in Hepburn v. Griswold had been 
reached, of eight members, a chief justice and seven associ- 
ate justices. Before the opinion was handed down Justice 
Grier had been forced to resign.* In 1866 5 an act had gone 
into effect providing that no vacancies in the Supreme bench 
should be filled until the number of associate justices was 
reduced to six. This was repealed in 1869, 6 and the num- 
ber of justices increased to nine. To the two vacancies thus 
created Justice Strong and Justice Bradley were appointed. 
Justice Strong had had opportunity on the bench of Penn- 
sylvania to express his views on this question, 7 so that his 
position in support of the act was well known. Of Justice 
Bradley it is said that all that was known of his views was 

i Legal Tender Cases, 12 Wallace, 457. 

8 "At that time gold stood at about 120; so that, if the decision [Hepburn v. 
Griswold] held, all debts and obligations would speedily represent one and one- 
fifth times their value as here expressed in greenbacks. This was the weak point 
for the court, for it set against it the powerful influence of many corporations 
.... with maturing ante bellum obligation." HART, op. cit., p. 397. On this point 
see an article on " Constitutional Interpretation " by Professor Bascom, Yale Review, 
Vol. X, p. 350. Also SHOCKERS, op. cit., p. 261. 

3 HAET, op. cit., chap. X. * 7 Wallace, p. VII. 

5 July 23, Statutes at Large, Vol. XIV, p. 209. This act is said to have been the 
result of spite against President Johnson. 

April 10, ibid., Vol. XVI, p. 44. ' 52 Pa. St., 9. 


the fact that as counselor for a corporation he had aclriaed 
the payment of their obligations in gold as a matter of 
honor. 1 In case of a reconsideration, the decisive vote 
would of course be cast by him. 

On motion of the attorney general a reconsideration of 
the legal-tender question was ordered immediately upon the 
completion .of the court* in two cases, which were after- 
ward dismissed. Not until the following year was Hepburn 
v. Griswold formally overruled as to prior contracts ; but the 
country had understood from the previous action of the court 
that the question was entirely open, and the act was then 
held to apply to contracts entered into both before and after 
its passage.' 

This reversal of a decision so recently announced by so 
slight a change of relative numbers in the majority and 
minority of the court, with the change of personnel so promi- 
nent a factor in the situation, constitutes a unique feature in 
the history of the American Supreme Court All considera- 
tions of judicial dignity, of regard for precedent, of desire for 
the stability of the law, would have led to acquiescence in the 
decision, or at least such a decent delay in its reconsidera- 
tion as would have allowed new arguments to be advanced, 
new elements in the general condition of affairs to appear; 4 
or, it might have been allowed to stand as to prior con- 

i See the letter of Senator Hoar to E. J. James, At 

Vol. Ill, p. SO. It is unnecessary to state and refute the ehartes of penooal corrup- 
tion of the justices freely made at the time. Even if the lowest view of the situation 
is taken, it is wholly unnecessary to adduce motires of personal corruption la the UMO 
existing state of public sentiment. Still, a statement of the history of the court would 
be incomplete without reference to them. A most interesting paper describing UM 
methods of coming to a decision has just been published by Justice Bradley'* heirs. 
See Appendix III, p. 100. 

(Justice Bradley was sworn in March 2S. 1871, and the attorney general moved 
reconsideration on March 25. 

> Legal Tender Cases, 12 Wallace, 457. 

For the other side of the argument. /. e., for reasons for immediate recoosider*- 
tion, see the article on "Constitutional Interpretation" by Professor Batcocn. lor. r.t. 
VoL X, p. SO. 


tracts, and the application of the act to subsequent contracts 
might have been sustained. Those considerations of a politi- 
cal and material character which demanded its reconsidera- 
tion, 1 however, prevailed. Whether the result of the 
reconsideration be accepted as good law or not, the fact of 
such a change under such circumstances must be universally 
regarded as a deplorable incident in the history of the United 
States judiciary. 

In this decision, 2 as in the former arguments, appeal was 
had to considerations of public policy. The idea of result- 
ing powers that is, such as were not expressly conferred by 
the constitution, but were incident to a group of those so 
bestowed was developed, and the power to bestow the legal- 
tender quality upon bills of the government was classed 
among such powers. The argument that the obligation of 
contracts had not been impaired, because that obligation 
consisted in the duty to pay such money as was lawful at 
the time of payment, that is, the principle of the Case of 
Mixt Monies, which had been on the former occasion 
rejected by the minority, was now advanced; but, as before, 
it was maintained that, even if this was not the law, Con- 
gress had the power to impair such obligations. 

The distinction between contracts entered into before and 
after the date of the passage of the act was denied, and the act 
was held to apply to both classes and to be a legitimate exer- 
cise of power. Stress was laid upon the exigency existing at 
the time, and upon the necessity of full power over sword and 
purse ; and, finally, the power was held to exist as a war power. 8 

Justice Field's contribution to the argument of the 

1 Legal Tender Cases, 12 Wallace, 457. 

2 Justice Strong delivered the opinion of the court, Justice Bradley giving a 
concurring opinion, while the dissenting justices each gave his opinion at length. 

3 Justice Bradley logically refused to limit the existence of the power to the 
duration of an exigency arising out of war, but declared that the question of the 
existence of that exigency was a legislative question, as had been argued by the 
counsel against the act. 


minority 1 is a masterly analysis of the true nature of the 
contract of borrowing, which should not be omitted: 

The terms " power to borrow money **.... have not ooe mean 
ing when used by individuals and another when granted to corpo- 
rations, and still a different one when possessed by QOBgmv*. 
They mean only a power to contract for a loan of money upon con- 
sideration to be agreed between the parties. The amount of the 
loan, the time of payment, the interest it shall bear, and the form 
in which the obligation shall be expressed are simply matter* of 
arrangement between the parties. As to the loan and security for 
its repayment, the borrower may of course pledge such property 
as revenues, and annex to his promises such privileges, as he may 
possess. His stipulations in this respect are necessarily limited to 
his own property rights and privileges, and cannot extend to those 
of other persons. 

According to the decision, then, the power exercised by 
Congress in authorizing the issue of legal-tender notes was 
a legitimate power in time of war, and such notes could be 
employed to cancel obligations growing out of contracts 
entered into both before and after the passage of that act, 
provided that such obligations assumed the form neither of 
involuntary obligations to commonwealth governments nor 
of contracts in terms of specific forms of coins. 

The act of May 81, 1878," brought up the question 
whether or not it was a power to be exercised in time of 
peace. That act said nothing, in declaring that the legal- 
tender notes, after being canceled, should be reissued, as 
to whether or not they should be reissued as legal tender; 
but that quality was claimed for them. The question came 
before the Supreme Court in 1883,' and by a vote almost 
unanimous (8 to 1) it was decided that Congress had the 
power in time of peace to bestow this quality on the issues 
of the government The power was declared by the court 

> Formerly the majority. 

* Statute* at Large, VoL XX, p. 87 ; above, p. 121. 

i Juillard v. Greeomao, 110 U. 3., 421. 


to be incident to that of borrowing, "the power to raise 
money for the public use on a pledge of the public credit" 
including the power "to issue, in return for the money 
borrowed, the obligation of the United States in any appro- 
priate form of stock, bonds, bills, or notes .... adapted 
to circulation from hand to hand in the ordinary transac- 
tions of business." The general power of Congress over the 
currency of the country is then adduced. Congress has the 
power, argues the court, to incorporate national banks, with 
the capacity for their own profit as well as for the use of the 
government in its money transactions of issuing bills which 
under ordinary circumstances pass from hand to hand as money 
at their nominal value, and which, when so current, the law 
has always recognized as a good tender in payment of money 
debts, unless specifically objected to at the time of the tender. 1 
The constitutional authority of Congress to provide a cur- 
rency for the whole country, in the form either of a coin cir- 
culation or by the emission of bills of credit, is now fully 
established. These powers over the currency, to coin, to emit 
bills, and to make anything other than gold and silver a legal 
tender, are prohibited to the states. From this it follows 
that Congress has the power to issue the obligations of the 
United States in such form, and to impress upon them such 
qualities as currency as accord with the use of sovereign 
governments. And, as a third argument, resort is had to 
the doctrine of sovereignty: 

The power as incident to the power of borrowing money and 
issuing bills or notes of the government for money borrowed, of 
impressing upon those bills or notes the quality of being a legal 
tender for the payment of private debts, was a power universally 
understood to belong to sovereignty in Europe and America at the 
time of framing and adopting the constitution of the United States. 2 

1 In this extraordinary statement the court ignores the fact that when a form of 
money is a tender the creditor cannot object to receiving it. 

2 Juillard v. Greenman, 110 U. S., 447. 


Under the power to borrow money on the credit of the United 
States and to issue circulating notes lor the money txxrowcd, 
its [Congress's] power to define the quality and force of those 

nnt.-s as cunvnry is as I. road as th.- lik-- \>;\,->. OfWttl Ml || 

currency under the power to coin money and to regulate the ralue 

Congress, as the legislature of a sovereign nation, being expressly 
empowered by the constitution to lay and collect taxes, to pay the 
debts, and provide for the common defense and general welfare of 
the United States, and to "borrow money on the credit of the 
United States," and " to coin money and regulate the value thereof, 
and of foreign coin," and being clearly authorized as incidental to 
the exercise of those great powers to emit bills of credit, to charter 
national banks, and to provide a national currency for the whole 
people in the form of coin, treasury notes, and national bank bills, 
and the power to make the notes of the government a legal tender 
in payment of private debts being one of the powers belonging to 
sovereignty in other civilized nations, and not expressly withheld 
from Congress by the constitution, we are irresistibly impelled to 
the conclusion that the impressing upon the treasury notes of the 
United States the quality of being a legal tender in payment of 
private debts is an appropriate means, conducive and plainly 
adapted to the execution of the undoubted power of Congress, con- 
sist. -nt with the letter and spirit of the constitution, and therefore, 
within the meaning of that instrument, " necessary and proper for 
carrying into execution the powers vested by this constitution in 
the government of the United States." 

Of the dissenting opinion by Justice Field, two important 
points should be noticed. Objection is raised by him to u the 
rule of construction adopted by the court to reach its con- 
clusions, a rule which, fully carried out, would change the 
whole nature of our constitution and break down the barrier* 
which separate a government of limited from one of unlimited 
powers." The second is the denial of the argument from 
sovereignty : 

Of what purpose, in the light of the tenth amendment, is it. then, 
to refef to the exercise of the power by the absolute or the limited 
government of Europe or by the states previous to the constitution? 


Congress can exercise no power by virtue of any supposed inherent 
sovereignty in the general government. Indeed, it may be doubted 
whether the power can be correctly said to appertain to sovereignty 
in any proper sense as an attribute of an independent political 
community. The power to commit violence, perpetrate injustice, 
take private property by force without compensation to the owner, 
and compel the receipt of promise to pay in place of money, may 
be exercised, as it often has been, by irresponsible authority, but it 
cannot be considered as belonging to a government founded upon 
law. 1 

This objection from this minority of one gains force when 
it is realized that for an analogous act on the part of the 
English government, from which American ideas of sovereign 
power are drawn, we should have to go back to the reign of 
Henry VIII. 

It is evident, however, that the bases for a decision either 
favorable or adverse to the exercise of this power are large 
considerations of public policy, of constitutional interpreta- 
tions, of judicial policy, rather than strictly legal considera- 
tions. The substratum of law, in the principle of the Case 
of Mixt Monies, was at first distinctly, if not expressly, 
rejected in the admission that such legislation, applied to 
pre-existing agreements, did impair the obligation of con- 
tracts. And while men differ on these questions of public 
policy 2 and constitutional interpretation, they will disagree 
as to the legal-tender decisions; but there has been a 
general acquiescence in them and there is apparently no 
prospect of their being reopened. The whole question has 
become one within the discretion, since within the power, of 

From this inquiry into the extent to which the quality of 
being current, using that word in the older sense of the 

1 Juillard v. Qreenman, 110 U. S., p. 466. 

2 In support of the decisions, see particularly Professor THAYER, "Legal Tender," 
Harvard Law Review, Vol. I, p. 70; HARE, Constitutional Law of the United States, 
chap. 57. As opposed may be cited BANCROFT, The Constitution Wounded in the 
House of its Guardians, and TUCKER, Constitution of the United States, sees. 509, 510. 


English proclamation, has been bestowed upon government 
issues, the following results emerge : (1) On no notes issued 
daring the period prior to 1868 was the quality of being 
a tender in private transactions bestowed. (2) On all the 
notes issued during that period was bestowed the quality of 
being receivable for all public dues. (3) Upon the notes 
authorized in 1890, and upon them alone, was bestowed the 
quality of being both a tender in private transactions and 
receivable in all payments to the government (4) The power 
to bestow the quality of being a tender in private trans- 
actions has been adjudged an incident to sovereign powers 
vested in Congress similar to the ancient prerogative money 
power of the English Crown. 



The First and Second Banks of the United States The National 
Banking System State-Bank Notes The Webster Resolutions, 
1816 The Treasury Circular, 1836. 

THE notes of the United States banks and of the banks 
chartered by the separate states have never had the full 
legal-tender quality bestowed upon them; yet both classes 
of notes have been given a limited currency, and have been 
the occasion of such interesting federal action as to bring 
them under the definition laid down 1 and to make a discus- 
sion of them here appropriate. The notes of institutions 
chartered under federal authority will first be considered. 

The creation of a national bank formed an important 
item in the plans of Hamilton for the creation and establish- 
ment of the public credit, and in accordance with the sug- 
gestions made by him in his "Report on a National Bank," 
presented to Congress on December 6, 1790, 2 a bill was 
introduced in the House of Representatives having for its 
object the creation of such an institution, and became a law 
February 25, 1792. 3 By section 10 of this act the bills and 

1 Above, p. 3. 

2 In answer to a resolution calling on him for further suggestions for the support 
of the public credit. Annals of Congress, Vol. I, p. 1722; also Appendix, p. 2031. The 
discussion provoked by this bill will be found below, Appendix IV, p. 169. 

s The bank was chartered for twenty years; there were to be twenty-five di- 
rectors, for whom only stockholders who were resident citizens of the United States 
could vote; no foreigner could be a director; a fourth of the directors were elected 
each year. Reports were to bo made to the secretary of the treasury at his request, 
not oftener than weekly, and he could inspect the books, except private accounts. 
Real property could be held only for the use of the bank or for foreclosure. Loans of 
over $100,000 could be made to the United States only with the consent of Congress ; 
$50,000 was the limit of loans to the United States, and none could be made to foreign 
potentates. No notes under $10 were to be issued. Statutes at Large, Vol. I, p. 191. 



notes of the corporation which were made payable, or which 
had become payable, on demand in gold or silver coin were 
made receivable in all payments to the United States, and 
were so far a lawful tender.' This provision was repealed 
March 19, 1812,' the existence of the bank having termi- 
nated by the conditions of the charter on February 28 off 
that year. A similar provision* was inserted in the charter 
of the Second Bank of the United States, authorized April 
10, 1816,* and repealed June 15, 1836, ' after the termina- 
tion of that institution's existence.* 

During the period, then, from 1792 (February 25) to 
1812 (March 19), and from 1816 (April 10) until 1836 (June 
15), the notes of the Bank of the United States were ft legal 
tender in all payments to the United States. 

After a period of twenty-five years a project for the 
organization, not of a bank, but of a system of banks, was 
again brought forward, this time under the pressure of the 
Civil War. The plan for such a system was outlined by Sec- 
retary Chase in his report of December, 1861, 1 and again 
urged by him in December, 1862,* and on January 19, 1863,* 
was made the subject of a special message to Congress. 
In accordance with these suggestions a bill " to provide a 
national currency secured by a pledge of United States 
stocks, and to provide for the circulation and redemption of 
the same," was introduced into the House of Representatives 

i "That the bills or notes of the said corporation originally made payable, or 
which shall have become payable, on demand in cold and Uer coin, shall be 
receivable in ail payments to the United States." 

;Wd.,VoLII,p. 6. 

Identical in terms, except for the proviso, " unieM otherwise directed by act of 

Ibid., Vol. Ill, p. 2M, sec. 14. Ibid., Vol. V. p. O. 

April 10, 1838, by the term* of its charter-See 0e6o/ / Oamgrtm U31-O. 
Appendix, p. 73; SOKXKB, HMory of Banking i* tk CntM State*, p. 30. 

T (7 fe>6e. Thirty-seventh Congress, 2d Sea*.. Appendix, p. 23. 

Ibid., 3d Sess. , Appendix, p. 25. Ibid., p. W. 


on July 11, 1862, 1 into the Senate January 26, 1863, 2 and 
became a law February 25, 1863. 3 This law proved unsatis- 
factory, however, and was repealed and superseded by an act 
of similar title which became a law June 3, 1864. 4 

The system as created in 1863 and modified in 1864 con- 
sisted of associations organized for the period of twenty 
years, 5 with a minimum capital of $50,000 ; 6 the smallest 
deposit for circulation being $30,000. 7 On such deposit of 
United States notes an amount equal to ninety cents on the 
dollar of market value, not exceeding par, was to be furnished 
in circulating notes by an officer of the Treasury Department. 8 
The lowest denomination of these notes was to be one dollar 
until after resumption of specie payments, and then $5. 9 The 
amount of notes for circulation was limited to $300,000,000.' 
The banks in the sixteen leading cities were required to main- 
tain a reserve of lawful money equal to 25 per cent, of their 
circulation and deposits; all others were to keep 15 per 
cent. 10 The amount of indebtedness was limited to the amount 
of capital paid in. 11 

Quarterly reports were to be published in the news- 
papers. 12 A tax of 1 per cent, was laid on the average 
amount of circulation, of one-half of 1 per cent, on the 
deposits, and the same on the capital stock not invested in 
United States bonds; and a state tax on the shares not 
greater than the rate at which other moneyed capital was 

i Globe, Thirty-seventh Congress, 2d Sess., p. 3258. 2 Ibid., 3d Sess., p. 505. 
a Statutes at large, Vol. XII, p. 665. < Ibid., Vol. XIII, p. 99. 

5 Extended twenty years by act of July 12, 1882. Ibid., Vol. XXII, p. 162. 

* $50,000 in places of not over 6,000 population ; $200,000 in places of over 50,000 
population ; $100,000 for places between those limits. Act of 1864, sec. 7. Of this one- 
half had to be paid in before beginning operations. Sec. 14. 

7 Or one-third of capital stock paid in. Sec. 15. 

Sec. 21. This was altered March 3, 1865, to a smaller proportion, so that a bank 
with more than $3,000,000 capital could have only 60 per cent. Ibid., Vol. TCTTT, p. 

Sec. 22. 10 Sec. 81. 

i Sec. 36. " Sec. 34. See ibid., Vol. XV, p. 326. 


taxed ' was allowed to be imposed by the state in which 
the shares were located. 

The notes of the banks so organized were made roceir- 
able at par in all parts of the United States, in payment of 
taxes, excises, public lands, and all other does to the United 
States, except f.r (liiti.-- ..ii im|M,rf*. aii'l f Of tO -i!i:.^ . .: 
other debts and demands owing by the United States to indi- 
viduals, corporations, and associations within the United 
States, except interest on the public debt and in redemption 
of the national currency.* The notes were also to be taken 
at par by nil the banking associations formed under the act.' 

So much for the notes of banks authorized by f*dtral 
authority. As to the notes of institutions existing under 
charters granted by the respective commonwealths, it may be 
remarked that the constitution of the United States was 
silent on the subject of the power of the states to grant char- 
ters of incorporation to banking institutions; but at the time 
of its adoption and in the years immediately following the 
states were exercising this power freely.* There was no ques- 
tion or controversy as to the power of the states in this direc- 
tion until, in the second and the early part of the third decade 
of the nineteenth century, two influences led to their power 
being questioned. One of these influences was the effort 
put forth by some of the states to evade by means of so-called 

I Sec. 41. 

tScc. 23: "and the same shall be receded at par In all part* of th United 
States in payment of taxes, excises, public lands and all other does to the l"nitd 
States, except for duties on imports, and also for all salaries and other debu and 
demands owing by the United States to individual*, corporations, and aMoeiatioM 
within the United States, except interest on the public debt and in redemption of 
the national currency." 

Sec. S2: " Erery association formed or existing under the ptortsionsof this 
act shall take and reoeire at par for any liability to the said association any and all 
notes or bills issued by any association existing under and by rirtoe of this act." 

The Bank of Massachusetts was chartered February 7. 17M: that of Maryland. 
1790; of Proridence. 1191; of Albany, Boston, Alexandria, and Richmond. ITK; 
the Bank of South Carolina, unchartered, becan operation that ME 
Hutory of Banking in the United .States, p. 19. 


"banking institutions" the prohibition of the constitution 
against their issuing bills of credit ; the other was the align- 
ment of those in favor of state banks in opposition to those 
who favored federal banks, and the denial by the latter of 
the legitimacy of issues of such organizations as conflicted 
with the federal institutions. 

The efforts on the part of the states to avoid the prohibi- 
tion against bills of credit assumed two forms. The first 
was that selected by the state of Missouri when, in 1821, its 
legislature enacted a law providing for the issue of loan cer- 
tificates signed by state officers to the amount of $200,000, 
in denominations of from fifty cents to $10, which should be 
receivable for public dues and by public creditors, these 
certificates to be secured by the income from salt springs 
belonging to the state, and by the faith of the state, which 
was pledged for their repayment. The legitimacy of this 
issue came before the Supreme Court in 1830, 1 and these loan 
certificates were decided to be " bills of credit issued by the 
state" of Missouri, and so prohibited. The court then defined 
the term "bills of credit," as used in the constitution, as 
"paper intended to circulate through the community for its 
ordinary purposes as money, which paper is redeemable at a 
future day," or "a paper medium intended to circulate 
between individuals or between government and individuals, 
for the ordinary purposes of society." 

Kentucky had adopted a different method of accomplish- 
ing this evasion, and had chartered a so-called "Bank of 
the Commonwealth of Kentucky." 2 Of this bank the stock 
was owned by the state, the officers were elected annually 
by the legislature, and their salaries were paid by the state. 
This organization was to issue $2,000,000 8 worth of notes, 
which were to be apportioned among the counties in pro- 

i Craig v. The State of Missouri, 4 Peters, 410. 2 November 29, 1820. 
a Increased the next month to $3,000,000. 


portion to the taxable property, on mortgage securities, 
and, as it was naively said, to loan to such as needed the 
notes "for paying his or her just and honest debts.' 1 Its 
capital was to consist of all money paid in for land warrant* 
for certain public lands, of produce of stock owned by the 
state in the Bank of Kentucky, and unexpected balances 
in the treasury at the end of each year. 1 Profits went to 
the state, and the notes were receivable for public dues and 
by public creditors. 

The legality of this corporation and its notes came first 
before the Supreme Court in 1834,' but was decided only in 
1837, because of the change in the personnel of the bench 
and its being incomplete* during that period. 

In the argument of this case, the definitions laid down 
in Craig v. Missouri were quoted and applied; it was also 
maintained that the state could not do indirectly what it 
could not do directly ; but the court rejected the definition 
previously given and substituted for it a much narrower one, 
viz. : "to constitute a bill of credit, within the constitution, it 
must be issued by the state, on the faith of the state, and 
be designed to circulate as money. It must be a {taper 
which circulates on the credit of the state and is so received 
and used in the ordinary business of life. Those who issue 
must have power to bind the state." From this definition 
notes issued by banks, by individuals, by municipal corpora- 
tions, are all excluded ; and the argument that the state can- 

i Substantially the only capital the bank erer had was 17.000 appropriated by 
the legislature to buy books, paper, and slates. 

* A rait on a note drawn in 1830, the defense beta* " no consideration N hMM 
the consideration had consisted of notes of that bank. John Brisoo* tt mL *. 
The President and Directors of the Bank of the Commonwealth of Kentucky. U 
Peters, 257. 

In 1834 two Judges were absent; of the fire who heard the anrumsot. three 
thought the notes were within the prohibition. The court was not oosipssX fjstffl 
March, 1836. and the decision was rendered in January. 1837. Altbooch the K*n*oeky 
court of appeals had sustained the legitimacy of the bank, one of the KisQjlkf 
circuit courts in 1834 had decided against it in the case of Bank v. Mayea.-*oxna. 
History of Banking in the United States, p. 142. 


not do indirectly what it cannot do directly was rejected on 
the ground that to admit its validity would be to deny the 
legitimacy of state banks, and their legality could not be 

The hostility to state banks felt by those who favored the 
federal institutions was expressed by Webster when speaking 
of the renewal of the charter of the Second Bank of the 
United States. 1 He claimed for the federal government, on 
the ground of its control over the coinage, complete and 
exclusive control over the currency of the country, and sug- 
gested the illegality of state banks, admitting, however, 
that up to that time there had been no controversy on the 
question. 2 

1 May 25 and 28, 1832. 

2 Webster's Works, Vol. Ill, p. 395: "We all know, sir, that the establishment of 
a sound and uniform currency was one of the great ends contemplated in the adop- 
tion of the present constitution It cannot well be questioned that it was 

intended by that constitution to submit the whole subject of the currency of the 
country, all that regards the actual medium of payment and exchange, whatever 

that should be, to the control and legislation of Congress The exclusive 

power of regulating the metallic currency of the country would seem necessarily to 
imply, or more properly to include as a part of itself, a power to decide how far that 
currency should be exclusive, how far any substitute should interfere with it, and 
what that substitute shall be. The generality and extent of the power granted to 
Congress, and the clear and well-defined prohibition on the states, leave little doubt 
of the intent to reserve the whole subject of currency from local legislation and to 

confer it on the general government. Yet the currency of the country is now 

to a great extent practically and effectually under the control of the several state 
governments . . . . , or rather .... of the banking institutions created by the states. 
A hundred state institutions claim the right of driving coin out of circulation by 
the introduction of their own paper, and then of depreciating and degrading that 
paper by refusing to redeem it." 

He admitted that there had up to this time been no controversy as to the con- 
stitutionality of the power exercised by the states in creating banking corporations, 
and hoped that none would arise ; but on May 28th, speaking in opposition to amend- 
ments to the proposed bank charter introduced by an advocate of the local banks, 
he said (Vol. HI, p. 413) : " Let me ask whether Congress, if it had not the power 
of coining money and of regulating the value of foreign coins, could create a bank 
with the power to circulate bills 7 For one, I think that it would be difficult to 
make that out. Where, then, do the states, to whom all control over the metallic 
currency is altogether prohibited, get the power 1 It is true that in other countries 
private banks having no legal authority over the coins issue notes for circulation, 
but this they do always with the consent of the government, express or implied, and 
government restrains or regulates all their operations at its pleasure I con- 
fess, Mr. President, that the more I reflect on the subject the more clearly does my 
mind approach the conclusion that the creation of state banks for the purpose and 


The conflict between the federal bank and the state bank* 
brought forth Webster's arguments against the issues of state 
banks. In the same way the situation of the Civil War, the 
increased issues of the state banks due to the abnence of 
restraint after the suspension of specie payment*, the use of 
the legal-tender notes in their reserves and as a basis for 
extended circulation, 1 and the exigencies of Secretary Chase's 
plan for a national banking system, caused another attack on 
the state banks in the form of proposals to tax their issues. 
In December, 1861, in advocating the duty of the govern- 
ment to furnish a national currency, Secretary Chase laid 
down the proposition that Congress, under its constitutional 
power to lay taxes, to regulate commerce, and regulate the 
issue of coin, possessed ample authority to control the credit 
circulation of the country. 1 In execution of a part of his 
plan the system of national banks was created, but it failed 
to accomplish the end desired, as few state banks reorganized 
under the act of February 25, 1863. In 1864 the secretary, 

with the power of circulating paper 1* not consistent with the grant* and prohibi- 
tions of the constitution." 

These words are referred to approvingly by STORY in his Commtcntorie*, sees. 
1338-70. But it must be borne in mind that Webster is speaking as advocate for the 
national bank. See KNOX, Hittory of Banking, etc., p. 22; also Federalist. No, U. 

Briscoe v. Bank of the Commonwealth of Kentucky (1837) decided that the power 
belonged to the states, even when all the stock and all the profits belonged to the 

I HAST, op. cit., p. 275, speaks of 5,000 kinds of notes in circulation. See 8n 
MAX'S speech in Senate February 10, 1863, Globe, Thirty-seventh Congress, 3d SMS*, 
p. Ml. 

In his report, July 4, 1861, the secretary proposed a tax on -distilled liqoon, 
bank notes, carriages, and similar descriptions of property." Ibid., 1st Sees., Appen- 
dix, p. 4. There had been similar taxes for revenue In 17*7 (fttnhttetat Larp*. VoL I, 
p. K7), and from 1813 to 1817. SUMMEB, Hittory of Ha*tn*o, etc., p. 33; Bnrrow, 
Thirty Tears* View (N. Y., 18M), Vol. II, p. 8. Benton had proposed a tax in 1MO tor 
disciplinary purposes, but the Senate refused to consider it, on the ground of lack of 
power. Oiooe, Twenty-sixth Congress, 2d Sess., p. 54. In his report, December t, 18*1. 
Secretary Chase took the ground that " it is too clear to be reasonably disputed that 
Congress, under its constitutional powers to lay taxes, to regulate oummmrtm, and 
to regulate the value of coin, possess in ample authority to control the credit circula- 
tion which enters so largely into the transactions of commerce and effects in so many 
ways the value of coin. In the opinion of the secretary, the time has arrived wheo 
Congress should exercise this authority." /6^ Thlrty-ee^entA (fcogresa, Id Ssm, 
Appendix, p. 25. 


therefore, advocated the imposition of a prohibitory tax on 
state banks. 1 

The policy of control by taxation had been inaugurated 
by the passage of an act, March 3, 1863, 2 imposing a tax of 
10 per cent, on all fractional notes issued either by state 
banks or those organized under the federal law. This was 
continued by an act of March 3, 1865, 3 imposing a similar 
tax (10 per cent.) on the amount of notes of state banks 
paid out by any banking organization after July 1 of the 
following year. 4 The result of this prohibitory tax was, of 
course, the disappearance of state-bank issues and of the 
problems arising out of their use. 

The question arises as to what recognition was given to 
these notes by federal authority. 

By the "Act to Regulate the Collection of the Duties 
imposed by Law," of July 31, 1789, it had been provided that 

i Secretary Fessenden had assumed the duties of secretary of the treasury July 
5, 1864. Report of Secretary of Treasury, Globe, Thirty-eighth Congress, 2d Sess., 
p. 29. 

'Statutes at Large, Vol. XII, p. 709. Such notes had been prohibited the previous 
July 14. Ibid., p. 592. 

3 "That every national banking association, state bank, or state banking asso- 
ciation shall pay a tax of ten per centum on the amount of notes of any state bank 
or state banking association paid out by them after July 1, 1866." Ibid., Vol. XIII, 
p. 484, sec. 6. Enlarged to include notes of " persons .... intended for circulation," 
July 13, 1866. Ibid., Vol. XIV, p. 146. And " of any town, city, or municipal corpora- 
tion," March 26, 1867. Ibid., Vol. XV, p. 6. 

* The question of the constitutionality of this act, on the ground that it was a 
tax on a franchise granted by a state which Congress " on any principle exempting 
the reserved powers of the states from impairment by taxation must be held to have 
no authority to lay and collect," came before the Supreme Court and was decided in 
1869. The act was upheld on two grounds : (1) the issue of notes, being profitable 
contracts made by the corporation issuing them, could be made contributive to the 
public revenue, the rate being a legislative and not a judicial question ; (2) that Con- 
gress, under the coinage power, expressly conferred, and its power to emit bills of 
credit, long acquiesced in, could take such steps as seemed necessary to fit its coin 
and its bills to serve as currency. Veazie Bank v. Fenno, 8 Wallace, 533. Chief Jus- 
tice Chase handed down the opinion in this case. Since the decision of that case 
the question has not been widely discussed, although the Democratic platforms of 
1892, 1896, and 1900 have either expressly or by implication advocated the repeal of the 
law. See World Almanac, 1893, p. 88. " We recommend that the prohibitory ten per 
cent, tax on state-bank issues be repealed." Annual Cyclopedia, 1896, p. 763; ibid., 
1900, p. 717. 


such duties and fees should be collected in gold and silver 
coin only.' In 1797, when the public landa were being 
offered for sale, it was agreed that evidences of the public 
debt might be received in payment.' 

According to express legislation, then, specie, the evi- 
dences of the public debt, and the notes of the Bank of the 
United States' were the only media recognized in the col- 
lection of the obligations of the federal government 

During the lifetime of the First Bank of the United 
States, its notes supplied a large part of the circulating 
medium. They were received everywhere without question 
or doubt of their redemption, and through its habit of 
returning the notes of local banks for redemption it served 
as a check and regulator of their issues.' The expiration of 
the charter and the refusal of Congress to renew it altered 
the condition of affairs. To replace one bank with a capital 
of $10,000,000, one hundred and twenty banks with a capi- 
tal of $30,000,000 were created.' The method of organi- 
zation and management of these institutions was such as 
to arouse distrust. The exigencies of war and the exporta- 
tion of specie incident to winding up the affairs of the federal 
bank brought about a suspension of specie payments at the 
end of August, 1814.* 

Even during the existence of the United States Bank 
the local banks had been used by the federal government aa 
depositories, 1 and after its expiration the notes of banks in 
ports of entry were received by the treasury.* Because of 

i.Sta//et at Large, Vol. I, p. 45. sec. 30. As thaw was yot DO moor of the 
United States, foreign coins at specified rates were named as the medium. 
> Ibid., p. 307. See, also. Vol. II, p. 74. 

See abore, p. 199. 

BOLLES, Financial Jfotory of the United Slates, Vol. II. p. 381. 
ISCMKKB, History of Banking in the United Statm, p. 64. 

BOLLES, op. cit. Vol. II, p. 153. 

TSOMXES, op. c., p. 33: Oallatin's Writing*, Vol. I. p. MB. 

Annalt, Fourteenth Cone., 1st Seas., p. 1230. 


this, a great advantage accrued to those merchants who 
imported goods at ports of entry where the currency was most 
depreciated. The secretary of the treasury saw no other 
way out of the difficulty than to ask Congress to strengthen 
his position by designating specie or its equivalent as the 
only currency which might be accepted by the treasury and 
by prohibiting the deposit of funds in non-specie-paying 
banks. 1 A bill "for the more effective collection of the 
revenues in the lawful money of the United States" was 
therefore introduced, 2 authorizing the secretary to give 
notice that after December 31, 1816, revenues due the 
United States would be collected in specie, or in the notes 
of specie-paying banks, 3 and imposing a tax on the notes of 
non-specie-paying banks. 4 

This bill having failed of passage, 5 Webster introduced 
into the House of Representatives a set of resolutions, which 
he advocated on the ground that the prevailing practice con- 
stituted an infringement upon the constitutional prohibition 
that "no preference shall be given by any regulation of 
commerce or revenue to the ports of one state over those of 
another." 6 

These resolutions declared that : (1) All duties should be 
uniform, and no preference should be given to the ports of 
one state over those of another ; (2) the revenues of the 
United States should be collected in legal currency of the 
United States, treasury notes, and notes of the United States 
Bank ; (3) the secretary of the treasury should be required 
to carry these into effect. 7 

These were amended by dropping out the first declaration 

1 He also asked for a heavy tax on notes not redeemed in specie. innate, Four- 
teenth Cong., 1st Sess., p. 1229. 

2 By Calhoun. Ibid., pp. 1345-98. Sec. 1. * Sec. 4. 

5 Because of the strength of the state-bank interests and the proposal to issue 
treasury notes to supply the deficiency. Ibid., p. 1405. See SUHNEB, History of Bank- 
ing, etc., p. 74. 

1, 9, 6. T Annalx, Fourteenth Cong., 1st Sess., p. 1440. 


and by adding to the list of media receivable the note* of 
specie-paying banks." 1 

The restriction of banks which did not redeem their notes 
in specie was to take effect February 20, 1817; bat by that 
day the currency had been brought to a specie basis' ail 
over the country ; so that, by the resolutions, the mixed cur- 
rency of state and national bank notes, treasury notes, and 
specie had been fastened on the treasury. 

The charter of the Second Bank of the United States 
expired April 10, 1836. Already, in 1833, the public 
deposits had been removed from that bank ; or, rather, after 
the 26th of September, 1833, all public moneys had been 
deposited with certain state banks.' 

In view of the anticipated expiration of the charter of the 

1 This addition was proposed and then withdrawn by Calhoua in the BOOM ; and 
then added in the Senate. /bid., pp. 1371, 1440, 1449. 

The reason for proceeding by resolution instead of by bill Is stated by Webstar 
to be the fact that " the case is not one in which the law is deficient, bat on* ia which 
the execution of the law is deficient." This resolution passed both booses of Goo- 
(ran on the 26th of April, 1816 ; was approved by the president on the 30th. Web- 
ster's description of the condition of affairs may be quoted: "The situation of th 
country with regard to finances and the collection of its reTennes is most deplor- 
able. With a perfectly sound legal currency, the national reTennes are not collected 
in it, but in the paper of various sorts and degrees of value. Before th war the 
business of the country was conducted principally by means of the paper of the dif- 
ferent state banks. As these were in good credit, and paid their notes ia gold and 
silver, on demand, no great evil was experienced from the circulation of the paper. 
Not being, however, a part of the legal money of the country, it could not by law be 
received in the payment of duties, taxes, or other debts to the government. Bat being 
payable, and hitherto paid, on demand, the collectors and other agent* of the govam* 
ment had generally received it as cash. It had been deposited as cash in the banks 
which received the deposits of government, and from them it had been drawn as 
cash, and paid off to creditors of the public. During the war this state of things 
changed. Many of the banks had been induced to make loans of a very great amoont 
to the government. These loans were made by an issue of their own bills, which 
.... rested for redemption on government stocks. .... The excess of paper MHtaA 
alarm. Demands for payment began to be made on the banks and they all stopped 
payment. .... The depreciation is not uniform throughout the United Stale*, bat 
the notes are received in payment of taxes, etc. The result of this is that the people 
of the United States pay their duties and taxes in currency of different vmlnes in 
different places. .... Taxes collected In Massachusetts are one-quarts* higher than 
those which are collected by virtue of the same laws ia the District of Columbia "- 
Writing Vol. Ill, p. 49; Miituie* at Large, Vol. III. p. 343. 

tSCKXKB, History of Hanking, etc., p. 76. 

* By November 1, 1838, eighty-eight state banks in twenty-four stats*, with a 
capital of tn.576,449, held public deposits amounting to *4*J77 ,H6.-/ 


federal bank, local banks multiplied rapidly, 1 used the public 
deposits as a basis for circulation, and so caused great infla- 
tion of the circulating medium. 2 

It was a period of great speculative activity, the public 
land being one of the chief subjects of such speculation. 
Receivability at the public land office became the test of the 
credit of a bank bill, and banks were organized for the pur- 
pose of issuing notes which might be used in payments in 
this way. 3 

On June 10, 1836, Benton introduced a bill in the Senate 
providing that bank notes and paper currency should cease to 
be receivable or offered in payment on account of the United 
States or of the post-office, or in fees of courts of the United 
States; those of less than $20, after March 3, 1837 ; less than 
$50, after March 3, 1838 ; those less than $100, after March 
3, 1839; less than $500, after March 30, 1840; less than 
$1,000, after March 3, 1841; and all, after March 3, 1842.* 

This bill got no farther than the second reading, and, in 
view of the situation in regard to the sale of public lands 
and the refusal of Congress to act, President Jackson had 
his secretary of the treasury (Woodbury) issue the famous 
Treasury Circular, 5 directed to receivers of public money and 
to the deposit banks, and ordering them to receive only 
specie, 6 " in consequence of complaints which have been made 

i SUMNEE, History of Banking, etc., p. 231. Between 1832 and 1837, three hundred 
and forty banks, with a capital of over $99,000,000, were organized. 

tlbid., p. 219. 

3 If the bank failed, of course the treasury bore the loss. See KNOX, History of 
Banking in the United States, pp. 80 f . 

* Debates of Congress, Vol. XII, pt. II, p. 1745. 

5 July 11, 1836. This document can be found in Senate Documents 1836-7, No. 2, 
p. 416 ; or in DcNBAR, Laws of the United States Relating to Currency, Finance, and 
Banking (revised edition), p. 270. For an account of the political aspects of this act, 
see BENTON, Thirty Years' View, Vol. I, p. 676. 

6 With certain exceptions and indulgences in favor of bona fide settlers or resi- 
dents of the state in which the land lay. It was claimed by the president that his 
action was authorized by the resolutions of 1816, which in giving the secretary power 
to receive gave him power to reject the notes of banks which claimed to be specie- 
paying institutions; i. e. t to judge whether or not they came within the category. 


of frauds, speculations, and monopoliee in the purchase of 
the public lands, and the aid which is said to be given to 
effect these objects by excessive bank credits," etc. 

This action of the executive aroused intense feeling, and 
was the subject of immediate action on the part of Congress. 
On December 13 resolutions were introduced in the Senate 
with the intent of rescinding the circular, 1 and a discussion 
was begun involving the whole currency question.' 

On January 26, 1837 ,' a bill was introduced providing 
that revenue should be receivable in the legal currency of the 
United States, in notes of banks, which were payable on 
demand in specie, if they were of denominations not lower 
than 85, after December 30, 1839; than $10 after December 
30, 1840; or than $20 after December 30, 1841. This 
passed the Senate on February 10, 1837,* and the House on 
March I/ but, being left unsigned by the president, it did not 
become a law. 9 The following year a resolution was adopted 
by the two houses of Congress to the effect that it should 
" not be lawful for the secretary of the treasury to make or 
continue in force any general order which shall create any 
difference between the different branches of the revenue as 
to the money or medium in which debts or dues accruing to 
the United States may be paid." 7 

The situation, then, was this: Gold and silver coin were 
of course a full legal tender and receivable for all public 

I Debate* of CoitfreM, Vol. XIII, pt. I, p. 8. 

This debate tarns largely on the t roe import of the rMolntioos of 1911 TW 
circular was attacked on the ground that it WAS illegal a* cootraTvning thossj two- 
lotion*; that it was unconstitutional as discriminating between the eitisMM of 
different states; and eril in it* effects on business and induntry. It was la Ul dbaU 
December 21. 1813, that Webster spoke the oft-quoted words, " Mart unqutiaoably 
there is no legal tender and there can be no legal tender in this country under la 
authority of the gorernment other than gold and silTer." /6id.. p. . 

i Ibid., p. 578. * *** P- W*> 

/6id., pt. II, p. MOO. This bill is found in DDKBAB'S Laws, p. JT1. 

May 2. 1838, Clay Introduced a bill substantially the Ma* in oWt. Oloo*. 
Twenty-fifth Congress, 2d Sem., Appendix, p. U4. 

-Matute* at Large, Vol. V, p. 310. 


obligations; there were treasury notes out, likewise receiv- 
able for public dues; 1 by the resolution of 1816, all other 
media were prohibited than treasury notes, specie, and the 
notes of specie-paying banks ; 3 by the treasury circular and 
the executive order only specie was to be accepted in pay- 
ment for public lands; by the resolution of 1838 there was 
to be no discrimination between different kinds of revenue. 
The executive claimed that the effect of the resolutions of 
1816 was to give discretion in accepting or rejecting the 
notes of banks in determining whether or not they came 
within the terms of the resolution; the banks claimed the 
right to have their notes employed in meeting obligations to 
the federal government, i. e., the right to determine for 
themselves and the government whether or not they came 
within the description. 

Congress and the executive finally agreed, in 1840, upon 
a gradual abrogation of the resolution, 3 as follows: After 
June 30, 1840, one-fourth of all payments to the federal 
government should be made in ' ' the legal currency of the 
United States;" one-half after June 30, 1841; three- 
fourths after the same date in 1842; and, after June 30, 
1843, the entire revenue should be so collected in that cur- 
rency, which is explained to be gold and silver only. The 
next year this act was repealed; 4 but a few years later, when 
the independent treasury system was permanently estab- 
lished, 5 it was enacted that payments to the government and 
payments by the government should be only in gold and sil- 
ver coin or in treasury notes issued under the authority of 
the United States. 6 

1 See above, p. 106. 

2 The receivability of national-bank notes had been taken away by legislation ; 
above, p. 139. 

3 The creation later of the independent treasury system brought about the divorce 
of treasury and banks. Statutes at Large, Vol. V, p. 385, sec. 19. 

* Ibid., p. 439. 5 August 6, 1846. Ibid., Vol. IX, p. 59, sec. 19. 

Treasury notes were to be issued by the government only with the consent of 
the creditor receiving them. 


IP, in conclusion, the questions with which the inquiry 
began be called to mind they can be briefly milWMKl with 
reference to the United States. 

As to the agent of state through whom the power has 
been exercised, it may be said that in the colonies it was 
exercised by the colonial governments subject to the regula- 
tions and prohibition of Parliament' Under the continen- 
tal regime the power was exercised only by the states. 
Under the constitution such power as was believed to be 
vested in either government was bestowed upon the federal 
government as distinguished from that of the respective 
states; and prior to 1862 it was supposed that the power to 
bestow this quality on bills of credit was witheld from both. 
That power is now conceded to be likewise vested in 

The objects on which the quality has been bestowed have 
been various: Crude substitutes for coin in the form of arti- 
cles of use or ornament; coin, domestic and foreign; notes 
issued by the government, varying in character from true 
exchequer bills to bills adapted in all respects to monetary 
purposes ; notes issued by institutions chartered under fed- 
eral law; and, finally, notes issued by institutions owing 
their existence to commonwealth legislatures. 

Nor are the reasons which have guided action difficult to 
state. They have been four in number: (1) The desire to 
give certainty to contracts drawn in terms of money units 

i Parliament could forbid that bill* of credit tboold be made a tender : it 
probably hare named terms on which they might be made a loader, bat the Mi of 
the local legislature would hare been neoe**ary to upplemeot thl. 



the object of such legislation 88 that of 1792. (2) To furnish 
to certain notes a partial redemption or to anticipate expected 
revenues was the object of such provisions as those charac- 
teristic of the treasury -note legislation prior to 1862. (3) To 
obtain a medium for the payment of obligations to and by 
the government was the purpose of receiving the state-bank 
notes in the years following 1814. (4) Finally, the hope of 
sustaining the value of the object upon which the quality was 
bestowed led to the legal-tender legislation of the war and 
the silver legislation of 1878. 

Of these controlling motives the first may be said to be 
legal in its character, and not only legitimate, but essential 
to the proper relations of certainty between debtor and 
creditor. The economic question as to the proper nature of 
such legislation, whether the quality of being a tender should 
be bestowed upon all forms of money legitimized, or upon the 
one form only which is adopted as the standard of value, 
cannot be considered in such a study as this, purposely 
limited to the consideration of the political and constitu- 
tional aspects of the subject. It is hoped that the presenta- 
tion of these particular phases of the problem of the attitude 
of the state towards its money may throw light upon others 
without the limits of this investigation. 

The remaining motives named were monetary and financial, 
and, if within the competence of the government, should be 
judged by economic standards and by those considerations 
of public honesty and of expediency which should control 
the operations of a powerful government "founded on law." 

The operations of the federal government in connection 
with the treasury notes prior to 1862 and with the state- 
bank notes may be classed with those of the English 
government, which were said to be due to " mistaken policy." 
They resulted from the confusion existing in the minds of 
those in control as to the distinction between monetary and 


fiscal operations, and the effort to make the former serve the 
latter purpose. In neither of these cases was the private 
individual injured in his rights or property, except in so far 
as a failure to perform what has long been considered ft 
governmental function and supply a stable currency might 
be held to injure the individual. 

In the case of the legal-tender notes, however, the result 
was different. Then, the private individual, the creditor, 
was by a compulsory act of government, through the agency 
of the courts established to work justice between man and 
man, forced to share with the government, or bear for it, the 
cost of the conflict then being waged. By an extraordinary 
departure from both legislative and judicial precedents an 
act as tyrannical as any act of Henry VIII. in dealing with 
his coins found legislative and executive support and judicial 
sanction. It was fitting that the law based on the doctrine 
of the prerogative prevailing in the time of the Tudors 
should be invoked to sustain such legislation. 



New York. The legislation of February 25, 1862, came before 
the New York court of appeals in 1863 in two agreed cases, which 
became the leading cases on the subject until the Supreme Court 
of the United States passed upon the act. 1 In these cases the 
question of specie contracts did not arise; 2 simply the question of 
constitutionality of the act as regarded contracts drawn in general 
terms of " dollars " and " cents," or " lawful money of the United 
States." The court, by a vote of six to two, 3 upheld the act, the 
judges giving their opinion seriatim. Those who constituted the 
majority rested their conclusions on various grounds: The sov- 
ereign power over the money of the country was claimed for 
congress; the powers to regulate commerce, to borrow money, to 
raise and maintain armies, were in turn appealed to. The chief 
justice based his dissent on the power claimed for the states to 
regulate and control contracts, limited only by the constitutional 

State courts agreeing with New York. The New York decision 
was followed by the courts of Iowa, 4 Wisconsin, 5 California, 6 New 
Hampshire, 7 Michigan, 8 Missouri, 9 Pennsylvania, 10 Vermont, 11 
Tennessee, 12 South Carolina, 13 and Illinois. 14 

1 Meyer v. Roosevelt, and Metropolitan and Shoe & Leather Bank v. Van Dyke, 
27 N. Y. 400. 

2 The New York court likewise ruled that the act applied to contracts of this 
character, a decision overruled in Bronson v. Bodes. 

3 The opinion of Da vies, J., is that quoted and referred to as authority by the 
courts of other states ; the chief justice, Denio, was of the minority. 

*Hintrager v. Bates, 18 Iowa. 174 (December, 1864). See also 16 Iowa, 243, 415. 

* Breitenbach v. Turner, 18 Wis. 140 (1864). 

Lick v. Faulkner, 25 Cal. 404 (1864). George v. Conrad, 45 N. H. 434 (1864). 

Van Hoesen v. Kanourse, 13 Mich. 303 (1865). 

Riddlebarger et al. v. McDaniel, 38 Mo. 138. See 194, 458 (1866). 

10 Legal Tender Cases, 52 Pa. St. 9 (1866). Justice Strong participated in the 
decision of these cases. 

11 Carpenter v. Northfleld Bank, 35 Vt. 46 (1866). 

12 Johnson v. Ivry, 4 Caldwell, 608 (1867). 

"O'Neil v. McKern, 1 S. C. 147 (1869). i Black v. Lnsk, 69 111. 70 (1873). 



State courts rejecting the New York precedent. The court* of 
Kentucky and New Jersey refused to folJow in this direction, and 
both hold the act to be unconstitutional. The Kentucky decision' 
was uphrld in the case of Hepburn v. Griswold, and mwd not tie 
further treated. The New Jersey court had the quemtton to face 
after the decision of Hepburn v. Griswold, but al*o after there WM 
reason to believe that the Supreme Court would reopen the matter, 
and therefore argued upon the merits of the case.* 

State courts taking middle ground. The courts of Indiana 
and Georgia took middle ground, declaring that while the act was 
believed to be an excess of power, and so unconstitutional, because 
their decision was not a final one, but would be reviewed, they 
would resolve all doubts in favor of the act.' 



Doctrine of specific performance. As the decision of Bronson 
r.Rodes depends upon the legal doctrine of specific performance, a 
word of explanation may be in place. 

From very early times the courts of the common law have given 
in cases of breach of contracts a remedy in the form of money dam* 
ages, and not in the form of enforced performance of the terms 
of the agreement, t. e., not its specific performance. 4 As early 
as the fifteenth century, however, it WM recognized that in 
many cases such procedure was wholly inadequate and resulted in 
a failure of justice, and the lord chancellor, who, as M keeper of 
the king's conscience," exercised an extraordinary jurisdiction, 
granted relief in the form of specific performance of the terms of 
the contract. Usually land, "real property," was the subject of 
contracts so inforced, because of the theory that in a breach of an 
agreement relating to personal property or chattels a money equiva- 
lent could always be found. And, until quite recent times, the 
court of equity would not act unless it could be shown that there 
was no remedy at law, or that such remedy as existed was wholly 

I Griswold v. Hepburn. 2 Daral, 20 (1869). 
* Martin's Ez'ra v. Martin etal., 20 N. J. Eq. 421 (1810). 

i Reynolds v. Bank of Indiana, 18 Ind. 462 (WE) : abo Thajrw r. Hdw. 21 lad. 
282(1864); Jones v. Barker, 37 On. 903 (UM7). 

Bat toe POLLOCK AND MAITLAXD, op. cit.. Vol. II. p. I2L 


inadequate. Lately, and particularly in the United States, 1 the 
attitude of the courts has been more liberal, and specific perform- 
ance has come to be recognized as a suitable remedy in cases of 
breach of contracts having for their subject personal property or 
services, and in cases where there exists a remedy at law but that 
remedy is less effective in securing justice as between the parties. 

Application to act of February 25, 1862. As the text states, 2 
when the act of February 25, 1862, was passed and the legal- 
tender notes were issued, one of the questions raised was whether 
or not the act applied to contracts expressed not simply in terms of 
dollars and cents, but in terms of dollars and cents followed by 
descriptive language showing a special case, or a special need, or 
implying that the word "dollars" was used rather to indicate 
weight and fineness than simple money units, such as "lawful 
silver money of the United States, each dollar weighing at least 
seventeen pennyweights and six grains," 3 "dollars in gold," 4 "dol- 
lars in gold and silver coin, lawful money of the United States." 6 

It is unnecessary to cite decisions of commonwealth courts other 
than the Pennsylvania cases, to which reference is made for illus- 
tration. The question was generally held to be decided by the act 
of February 25, 1862, and these contracts held to be embraced 
within the terms of that act, together with contracts simply in 
terms of " lawful money." 

Action of California and Nevada. But in California and 
Nevada, where there was a strong feeling against the introduction 
of the legal-tender notes, legislation was enacted expressly granting 
a remedy in the form of specific performance in actions on such con- 
tracts, viz. : " In an action on a contract or obligation in writing for 
the direct payment in money made payable in a specified kind of 
money or currency, judgment for the plaintiff, whether the same be 
by default or after verdict, may follow the contract or obligation and 
be made payable in the kind of money or currency specified therein; 
and in an action against any person for the recovery of money 
received by such person in a fiduciary capacity or to the use of 

1 STORY, Equity Jurisprudence, 717 f. 

* Above, p. 126. See 29 Law. Rep. Ann., 412, note on "Special Contracts and 
Obligations to make Payment in Gold or Silver." 

3 Meroe v. Sailor, 52 Pa. St. 9. 

4 Laoghlin v. Harvey, Ibid., 9. 

' Bronson v. Rodes, 7 Wallace, 229. 


another, judgment for the plaintiff .... may be for the MUQA kind 
of money or currency so received by mich penmn." ' An act in 
identical terms passed the Nevada legislature and h^^fttw a law 
the following winter. 1 In both states this legislation was attacked 
because of its alleged unconstitutionality, as in conflict with the 
federal legal-tender act. In California the commonwealth act WM 
upheld, 1 on the ground, first, that the act granted no new right, 
but simply provided a remedy where there had been none before, 
and, second, that Congress, by requiring the payment of import 
duties in coin, had shown that contracts for coin were not includt*! 
in the terms of the act.' 

The Nevada act had a more adventurous history. It was first 
declared void. 4 This decision was, however, three years later, 
reconsidered and reversed,* and the court declared that the former 
decision had never been observed by the honest and respectable 
portion of the community. The reasoning of the California court 
was then adopted. 

Bronson r. Rodes. In the same year the question came before 
the Supreme Court in Bronson r. Rodes, 1 and the California 
doctrine was upheld. This decision did away with the supposed 
necessity of such legislation, as was afterwards recognized by the 
Nevada court,* when it was decided that a contract made payable 
in "gold coin or its equivalent in United States legal-tender notes " 
could be enforced according to its terms even when there was no 
such legislation. The result of the decision in Bronson r. Rode* 
retains for the parties to a contract the right to elect between the 
two kinds of currency resulting from the legal-tender legislation, 
i. e., between coin and paper. 

The principle here laid down has found legislative sanction as 
between the two forms of metallic money, in the words of the act of 

i Section Lam of California, IMS, chap. 421, MO. 2. The date of this act to April 
27, IMS. See also Code* of California, Annotated ; PomuoT. Civil Proewtorr ( IW ). 
aeo. 687. This has bean followed in some other states. Sea Idako (Mi OMt JVor- 
dvre, 1901, aeo. 3908. 

* January 4, M64. Carpenter v. Atherton, 25 Cal. Ml (July. Ittl). 

The ground taken in Bronson r. Rodes. This right was rvcocnlsrd also la ih 
act of March 17, 1862, recognising contracts for coin. Statute* at Lorpt, ToL XII. 
p. 370. And of March 3, 1888, imposing a teJnp doty in such contracts.-/**^ p. tit, 
sec. 4. 

Millean v. Stoat, 1 Nev. 573 (1865). > r. M loor, 4 Nw. 40 C1a. 

i From New York, where the coort had taken th other rtow.-l Wallaea, Sk 

Wells, Fargo A Co. P. Van Sickle, 6 NOT. 4ft (U70). 


1878, "unless otherwise expressly stated in the contract." But in 
several commonwealths the right of the individual to designate the 
form of money in which he shall be'paid has been expressly limited. 1 
And the Democratic Platform of 1896 advocated federal legislation 
doing away with this right. 2 " We favor such legislation as will 
prevent for the future the demonitization of any kind of legal-tender 
money by private contract." 



WHEN the order for rehearing in the Legal-Tender Cases was 
entered, Chief Justice Chase is said to have accompanied it with a 
memorandum in which the proceedings of the court were described 
in such a fashion as to betray the confidences of the conference 
room and reflect on the honor of those justices who constituted 
a majority of the court. When the existence of this document was 
learned, a "Statement of Facts" was prepared by Justice Miller, 
and signed by the four justices agreeing with him, to be filed as a 
reply to the memorandum. It is said that the memorandum was 
then withdrawn, and the reply consequently not filed. 

The memorandum of Chief Justice Chase is said to have been 
filed and then withdrawn ; but whether it was filed and withdrawn 
or simply prepared and withheld does not appear with certainty. 
There is no minute concerning it upon the records of the Supreme 
Court. Neither Professor Hart, of Harvard University, the latest 
biographer of Mr. Chase, nor Professor Bourne, of Yale, now 
engaged in editing certain of the Chase papers, can give any infor- 
mation concerning the document, nor is it to be found among the 
papers of Mr. Chase now owned by the Congressional Library. 3 
Something of its tenor may be ascertained from the following 

i Kansas Statutes of 1893, chap. 99; General Statutes 1901, sec. 1200: ". ... all 
obligations of debt .... stated in terms of dollars, and to be paid in money, if not 
dischargeable in United States legal tender notes, shall be payable in either the 
standard silver or gold coins authorized by the Congress of the United States, all 
stipulations in the contract to the contrary notwithstanding." Session Laics of 
South Dakota, 1891, chap. 85; also Annotated Statutes, 1901, sec. 4905, and CUTTING, 
Compiled Laws of Nevada, 1860-1900, sec. 2738. 

Annual Encyclopcedea, 1896, p. 763. 

8 Professor Hart, Professor Bourne, Mr. Putnam, the librarian to Congress, 
and the clerk of the Supreme Court have been extremely courteous in replying to 
inquiries put to them concerning this interesting document. 


extract from the dissenting opinion delivered by Mr. Cham in the 

H*XHM(I L.-f^il TriultT ('.I-' .' 

A majority of the court, five to four, in the opinion which ha* joat 
been read, reverses the judgment rendered by the former majority of 
five to three, in pursuance of an opinion formed after repeated argu- 
raentri at succeasive terms and careful conaide ration; and declare* the 
legal-tender clause to be constitutional ..... And this reveraal t unprece> 
dented in the history of the court, has been produced by no change ia 
the opinion of those who concurred in the former judgment. On* 
closed an honorable judicial career by resignation after the caae had 
been decided (27 November, 1867), after the opinion had been read and 
agreed to in conference (29 January, 1870), and after the day when it 
would have been delivered in court (31 January, 1870) had not the 
delivery been postponed for a week to give time for the preparation of the 
dissenting opinion. The court was then full, but the vacancy cauaed 
by the resignation of Mr. Justice Grier having been subsequently filled, 
and an additional justice having been appointed under the act incrvas- 
ing the number of judges to nine, which took effect on the fint Monday 
in December, 1869, the then majority find themselves in a minority of 
the court, as now constituted, upon the question. Their conviction*, 
however, remain unchanged. 

The "Statement of Facts" evoked by this Memorandum, which 
seems to have disappeared, has experienced a better fate. Fusing 
from the widow of Justice Miller to Justice Bradley, it was kepi 
under seal by him, and left with instructions that it should be pub- 
lished only when all the persons concerned in the great controversy 
has passed away. With the death of Justice Field this condition 
was fulfilled, and Mr. Charles Bradley,* the son of Justice Bradley, 
has therefore been able to include it in a volume recently 

This Statement of Facts is as follows: 

Latham v. The United States. 
Doming v. The United States. 

The very singular paper filed by the Chief Justice in these case*, 
in regard to the order of the Court, by which they are set down tor 

i Knox r. Lee, etc., 12 Wallace, 572. 

>I hare the consent of Mr. Bradley to include the paper hen. aad wish to 
acknowledge my appreciation of his eoorteay ia irrantimr me that pnrmlsrinsi 

ilueellaneotu Writino* o/ tke Late Ban. Joteph P. Brattle*, amd a Kiviemef 
Hit "Judicial Record," 6 William Draper Letcim. and ait Aertmnt of Hit "tHmtmtlm 
Opinion*," fry the Late A. Q. Jfeuoy. E*t., of Awrark, H. J.. editad aod compiled by 
his son, Charles Bradley (Newark, N. J. L. J. Hardman. 1MB). 


hearing on all the questions presented by their respective records, 
leaves the court no alternative but to present a reply in the same 
manner that the statement of the Chief Justice was presented. 

The paper itself is without precedent in the records of the Court. 
On the first day of this month the court announced, by the mouth of 
the Chief Justice, that these cases would be heard on the llth day of 
the month, on all the issues involved in the record. 

In making this announcement the Chief Justice did all that was 
necessary to prevent any misconception of his opinions by stating that 
he and Justices Nelson, Clifford and Field dissented from the order. 
This statement was placed in the records of the court. 

The present statement [that of the chief justice], therefore, was 
not necessary to explain the position of those gentlemen, or to vindicate 
their action, for it was well understood and was assailed by no one. 

It is an effort to take the action of the court out of the ordinary 
and usual rules which govern it in the simple matter of deciding when 
it will hear a case, and what shall be heard in that case, and subject 
the court to censure, because it will not consent to have the rights of 
the parties in such cases controlled by the vague recollection of some 
members of the Court, presented only in conference, not reduced to 
writing, nor ever submitted to the consideration of counsel charged 
with the conduct of the cases. If this be a just ground of censure, we 
must submit to it, and will be content to bear it. 

In reference to the facts on which the Court acted, it is conceded 
by all that the cases, having been passed without losing their place on 
the docket, were entitled to a preference whenever either party should 
call them up and insist on a hearing. The attorney general, on behalf 
of the United States, did this on Friday, March 25. At the same time 
he stated that the cases presented the same question in regard to the 
constitutionality of the legal tender statutes that had been decided in 
the case of Hepburn v. Griswold, at the present term, and asked the 
court to hear argument on that question. Mr. Carlisle, counsel for 
Latham, was present, and reminded the court that some six weeks 
before he had asked that his case might be set down for hearing, and 
that he now wished for an early hearing, but hoped that the legal 
tender question would not be reconsidered in his case. 

He did not at that time intimate in any manner that there had 
been any agreement of counsel, or any action of the Court, which pre- 
cluded that question in his case. 

The next day being conference day, the Court acted on the motion 
of the Attorney General; but on Monday morning, before it could be 
announced, the Chief Justice produced a letter from Mr. Carlisle to 
him, remonstrating against reopening the legal tender question in his 
case, and insisting that he had a right to expecxt that the case of 


Hepburn r. Grin wold would, ait to that point, decide bin ran* abo; hot 
he did not state in that letter that any order had been mad* to that 
effect, or any agreement of coumtel, verbal or otherwise. 

This letter of Mr. Carlisle, the only written document, paper or 
statement ever presented to the Court before iu order wan announced, 
as a foundation for refusing to hear the legal tender question in the two 
caaeo, was never tiled with the clerk, and cannot now be found by u. 

The Court, in deference to Mr. Carlisle's statement, made an order 
that on Thursday, the 31st of March, the whole matter should lie heard 
in open court. On that day the Attorney General, who had been 
shown Mr. Carlisle's letter, appeared and insisted on bin motion. Mr. 
Carlisle opposed it, and in argument gave his history of the case* in thi 
court He also argued that from that history he had a right to expect 
that whatever should be the judgment of the court in Hfjibum r. 
Oriswold as to the constitutionality of the legal tender acta, should 
conclude that matter in his case. But he did not state or rrly OH any 
agreement with counsel of the Government of the one cote by the other, 
or any express order of the court to that effect. 

Mr. Merriman, the senior counsel in Deming's case, was present at 
this argument. He took no part in it. He made no objection to the 
argument of the legal tender question in his case, and did not then 
claim, nor has he ever claimed in court, that that question was pre- 
cluded by any action of the Court or agreement of counsel. 

On full consideration of all that was then before it, the Court 
announced on Friday morning, the first of April, that the two case* 
would be heard on all the questions presented by the HCOtfc OB 
Monday, the llth, ten days thereafter; and at the same time the chief 
justice announced the dissent of himself and the other justices already 
mentioned to this order. 

When that day arrived, a letter was presented from Mr. Carikle, 
dated in this city, of the Saturday before, in which he said he had 
not had time to prepare for the argument, and that he had an engage- 
ment to try a case in New York on Tuesday, which he had not been 
able to postpone, and again urged the injustice of a roargument of the 
legal tender question in his case, and stated that he understood when 
his case had been passed that it would abide the decision in 
Hepburn v. Oriswold. A telegram was also read stating Mr Mcrhman'* 
illness. The Court from the bench postponed the hearing for OB* 

Since that time the Chief Justice baa received a letter from Mr. 
Norton, former solicitor of the Court of Claims, who once had notne 
charge in that capacity of these cases, in which he state* that when the 
eajea were continued in March, 1868, he understood that they would 
be governed as to the legal tender question by the decfeioo of Hfptau* 


v. Griswold. Of both these letters, now the only papers on file in regard 
to the matter, it is to be observed 

1. That they were presented after the Court had appointed a day 
for hearing all that might be said for or against the motion, and after 
both parties had had a full hearing and after the Court had, on full 
consideration of all that was before it, fixed the day for hearing and 
decided to hear the whole matter in issue. Of Mr. Norton's letter it 
may be further said, that it was made after Mr. Carlisle's two efforts to 
prevent a hearing had both been considered and overruled, and is made 
by a gentleman not now engaged in the cases, without verification, and 
without notice to any party, or counsel in the case. 

2. That neither of them asserts that any agreement, contract or 
promise was made by the counsel of the United States that Hepburn 
v. Griswold could control these cases in any matter of law whatever. 

We do not doubt that counsel for appellants and counsel for 
the United States believed, and in that sense understood, that the 
judgment of the Supreme Court in Hepburn vs. Griswold, and the 
other legal tender cases argued at the same time, would establish 
principles on that subject that would govern the cases now under 
consideration, and all other cases in which the same questions might 

This understanding was no more than the expectation, usual and 
generally well founded, that a principle decided by this court will 
govern all cases falling within it. But this expectation must be subor- 
dinated to the possibility, fortunately rare, that the Court may recon- 
sider the questions so decided; and confers no absolute right. 

We have thus far considered only what occurred in open court 
since the motion of the attorney general was made to take up these 
cases; and in what has been said the court, consisting of Justices 
Swayne, Miller, Davis, Strong and Bradley, all concur. But the paper, 
to which we are replying, undertakes to give a history of the connection 
of these two cases with certain others, involving the legal tender 
question, so much at variance with the records of the Court and with 
the recollections of the three Justices of the Court first above named 
(the other two not then being members of the court), that we do not 
feel at liberty to permit it to pass in silence. 

This statement invades the sanctity of the conference room, and, in 
support of its assault upon the court, does not hesitate to make asser- 
tions which are but feebly supported by the recollections of a part of 
the four judges who joined in it, but which are inconsistent with the 
record of the court, and are contradicted by the clearest recollections 
of the other three judges who then composed a part of the Court, who 
join in this answer: 

It is attempted, by speaking of these cases as two out of nine, 


which the court constantly had in view an involving the legal tender 
question, to sustain the inference, that they were to be decided with 
the others, and were submitted to the Court, eo far an the legal tender 
question was concerned, at the same time. Now, the Ant and only 
time the legal tender cases were grouped together in any order off the 
court was on the second day of March, 1868, when the following order 
was made of record: 

" No. 80. 8. P. & H. P. Hepburn v. Henry Qriswold. 

M No. 225. Frederick Branson v. Peter Rode*. 

M Ordered by the Court, that these canca stand continued for 
reargument by counsel at bar on the first Tuesday of the next term 
and that the Attorney General have leave to be heard on the part of 
the United States." 

" No. 35. Mandelbaum v. People of Nevada. 

"No. 60. The County of v. the State of Oregon. 

" No. 67. John A. McGlynn, Ex'r., etc., v. Emily Magraw, Ex'trix. 

"No. 71. Joseph C. Willard v. Benj. O. Tayloe. 

M Ordered by the Court, that thea* causes stand continued to the 
next term, with leave to counsel to reargue the same if they see fit on 
any question common to them and to Nos. 89 and 225." 

The Chief Justice says that there were nine of these canon in all, 
which were to be governed by the decision of the Court made on the 
general argument in regard to legal tender. Here are six of them 
grouped in these two entries standing together. If Latham's and Deal- 
ing's cases stood on the same agreement or the same order, why were 
they not included ? It will not do to say that they were carelealy 
omitted, for the order is evidently drawn with particularity, and there 
can be no doubt that it includes all that it was intended to include. 

Nor will it do to say that these cases could not be included because 
they had other questions besides legal tender, for the cases of \\'illard 
v. Tayloe and Mandelbaum v. Nevada, which are in the order, included 
other questions, and were finally decided without touching that ques- 
tion. The case of Horwitz v. Butler, which is necessary to make oat 
the nine alluded to, although it involved nothing else but legal toader, 
was argued by itself after Branson v. Rode* was decided. There 
therefore, evidently no general agreement or order that cases not : 
should abide those that were, because they involved that question. 

It is said that subsequently to the decision of Htpbur* v. Qri- 
wold these cases "were called on several occasions, and it was again 
stated by the Chief Justice from the bench that the legal tender ques- 
tion having been determined in the other cases, would not be again 
heard in these." 

This statement is. as we are satisfied, founded in an entire misapre- 
hension. If any statement had been made from the bench that no 


argument would be heard in these cases of the legal tender question, 
it would certainly have attracted the attention of the judges who did 
not agree to that opinion, and would have met with a denial on their 
part so emphatic as to be remembered. 

The cases now under consideration were numbered six and seven 
of the docket of this term. They had, therefore, as the records of the 
courts show, been called and passed on the 8th December, two months 
before the announcement of the decision of Hepburn v. Griswold, 
which was Feb. 8. 

It further appears, thaton the 10th December the Attorney General 
moved to dismiss the appeal in Latham's case because it had not been 
taken in due time. The opinion of the Chief Justice is entered of record 
over-ruling this motion, because, though the appeal was not allowed 
within ninety days, it had been prayed within that time. In all these 
orders no hint is given that these cases were to abide the judgment in 
Hepburn v. Griswold. 

Very soon after the decision of Hepburn v. Griswold, Mr. Carlisle 
called attention to the Latham case, and asked that an early day be 
assigned for its hearing. The Chief Justice was about to do this in open 
court when Mr. Justice Miller requested him to take the matter into 
conference. When the motion was called in conference, Mr. Justice 
Miller said that the case involved the legal tender question, and that 
he hoped it would not be set for hearing until the two vacancies on the 
bench were filled, as nominations were then pending for both of them. 
No objection was made to this, and the motion of Mr. Carlisle was 
postponed indefinitely. The Chief Justice remarked, as those of us 
who were present well recollect, that he considered the legal tender 
question as settled by Hepburn v. Griswold, as far as it went, but none 
of the judges gave any intimation that there was anything in the history 
of these which precluded that question from being considered in them. 
If it could not, there was no reason for postponing their hearing for a 
full bench, as was done, for they are otherwise quite unimportant, 
either in principle or amount, and were entitled to a speedy hearing, as 
they had been long delayed. 

Conceding, as we do freely, that our brethren believed that such an 
order or statement was made verbally, should it govern our action ? 

We cannot consent to this, because if any order or statement 
was made orally, unless it was reduced to record or is assented to or 
admited by the counsel for the United States, it is no sufficient legal 
ground for refusing to hear the appellee on any defence found in the 
record of these cases. 

In support of this we hold the law to be that without some order 
of Court made of record, or some written stipulation signed by the party 
or his counsel, or some verbal agreement of the parties established to 


the satisfaction of the Court, no party can be deprived of the right to 
any defence in this court which the record of bin cane pnwenU. 

Much stress is laid in the paper we are considering upon the long 
deliberation, the clear majority and the liberality of the court in giving 
time to the minority to file the dissent in Hepburn v. Uriiwld, and we 
are freely told the steps in conference which led to the final result. 

The minority in that case are profoundly impressed with the belief 
that the circumstances of that decision, if well understood, would 
deprive it of the weight usually due to the decisions of this Court. The 
caooo had been on hand eighteen months or more. There was no pres- 
sure for a decision. There was one vacancy on the bench. It was 
believed that there would soon be another. Under these circumstance* 
the minority begged hard for delay until the bench was full. But it was 
denied. When, after all this argument and protracted consideration, 
the case was taken up in conference, and was there discussed for three 
or four hours, in which discussion every judge took part, the vote was 
taken and the court was found to be equally divided on affirming or 
reversing the judgment of the Court of Appeals of Kentucky.' 

Before the conference closed, however, the vote of one of the judges 
who had been for reversing the judgment was changed. The circum- 
stances under which this vote was changed were very significant, but 
we do not deem it proper to state them here. Without that change no 
opinion could have been rendered holding the legal tender statutes 

The question thus decided is of immense importance to the gov- 
ernment, to individuals and to the public. The decision only partially 
disposed of the great question to which it related, and has not been 
received by the profession or by the public as conclusive of the matter. 
If it is ever to be reconsidered, a thing which we deem inevitable, the 
true interests of all demands that it be done at the earliest practicable 

We did not seek the occasion, but when the case seemed fairly 
before us we could not shrink from our duty as we underHtood it. 

We could not deny to a party in Court the right which the law gave 
him to a hearing on all the defences which he claimed to have. When, 
on the other hand, the rules of the court did not admit of a rehearing in 
the case of Hepburn v. (r Hsu-old, we did not attempt to strain or modify 
those rules to reach the question. In this case, as in all other*, we 
have endeavored to act as the law and our duty required. 

The foregoing paper of eighteen pages was prepared and agreed to 
as the reply of the court to a paper tiled by the Chief Justice on behalf 
of himself and Justices Nelson, Clifford and Field. That paper ban 
been withdrawn by him from the files of the court, and this is, 
fore, not filed. 


We all concur in the statement of the foregoing paper as to the rea- 
sons for our action in the matter to which it refers, and the statement 
of facts we declare to be true so far as they are matters which took 
place while we were respectively members of the Supreme Court. 


WASHINGTON, April 30, 1870. 

[NOTE. The original draft of the statement as drawn by Jus- 
tice Miller from the asterisk on p. 167, concluded in the words printed 
below; but on consultation with the other justices at the time it 
was thought best to omit it, as Justice Grier was still living, and 
might be pained if it should come to his knowledge. Justice Mil- 
ler, however, preserved it, and placed it in the same envelope with 
the statement as modified, where it was found after his death. It 
was as follows:] 

This would have affirmed the judgment, but settled no principle. 

An attempt was then made to convince an aged and infirm member 
of the court that he had not understood the question on which he voted. 
He said that he understood the Court of Appeals of Kentucky had 
declared the legal tender law unconstitutional, and he voted to reverse 
that judgment. As this was true, the case of Hepburn v. Griswold was 
declared to be affirmed by a court equally divided, and we passed to 
the next case. 

This was the case of McGlynn, Ex., v. Magraw, and involved another 
aspect of the legal tender question. In this case the venerable Judge 
referred to, for whose public services and character we entertain the 
highest respect, made some remarks. He was told that they were incon- 
sistent with his vote in the former case. He was reminded that he had 
agreed with a certain member of the Court in conversation on proposi- 
tions differing from all the other judges, and finally his vote was 
obtained for affirming Hepburn v. Griswold; and so the majority, 
whose judgment is now said to be so sacred, was obtained. 

To all this we submitted. We could do nothing else. In a week 
from that day every Judge on the bench authorized a committee of 
their number to say to the Judge who reconsidered his vote that it was 
their unanimous opinion that he ought to resign. 

These are the facts. We make no comment. We do not say he did 
not agree to the opinion. We only ask: Of what value was his concur- 
rence, and of what value is the judgment under such circumstances? 


That question thus decided ia of immeaae Important)* to th Gov- 
ernment, to the public and to individual*. The dooWoa only partly 
disposed of the great question to which it related, and haa not bam re- 
ceived by the profession or by the public aa concluding the matter. If 
it is ever to be reconsidered, a thing which we deem inevitable, the DM* 
interests of all concerned, public and private, demand that it b dooe 
at the earliest practicable moment 

We have not sought the occasion, but when the cane ia fairly before 
us, if it shall be found to be so in these cases, we shall not ahrink from 
our duty, whatever that may be. For the present, we believe it boor 
duty to hear argument on this question in these canon. Whether the 
judgment of the court in Hepburn v. Griswold shall be found by the 
court to be conclusive, or whether its principles shall be recon*idemi 
and reversed, can only be known after the hearing; and in the final 
judgment of the Court, whatever it may be, we are satisfied there will 
be acquiescence. 

At all events, the duty is one which we have not sought which 
we cannot avoid. 



THE bill providing for the creation of a bank of the United 
States provoked long discussion in the House because of its alleged 
unconstitutiouality, but was carried on February 8, 1791, by a role 
of 39 to 20.' It had passed the Senate January 20.* When pre- 
sented to the president he sought the advice of his attorney general, 
Edmund Randolph, his secretary of state, Jefferson, and his secre- 
tary of the Treasury, Hamilton. The two former argued against its 
constitutionality, as Madison had done in the debate in the House. 

The Continental Congress had chartered the Bank of North 
America on December 31, 1781. There was a question aa to its coo- 
stitutionality, and the states were requested to provide that there 
should be no other bank during the war.' By article XII of the plan 
submitted by Robert Morris in 1781, for a bank, and approved bj 
Congress, it was provided that " the bank notes payable on demand 
shall by law be made receivable in the duties and taxes of 
state in the Union, and from the respective states by the 
of the United States as specie." 4 

> AnnaU of CongrtM, Vol. I, p. I960. * Ibid.. Vol. I. p. PI*. 

iJovmaU <tf Congnm, Vol. VII, pp. 108, Oft. 

Submitted to ConreM May 17, ITSl.-JomrmoU if OM^TM. Vol. VII. p. 


Hamilton's argument in favor of such an institution is of 
especial interest, being the substance of the argument of the court 
in the case of McCulloch v. Maryland, in which, in 1819, the doctrine 
of implied powers was laid down. The use of this case later in the 
Legal-Tender Cases gives it again a peculiar significance. 

The president was persuaded by the arguments of Hamilton 
and signed the bill. 


In congress. Madison's argument was to the following effect: 1 
The grant of powers to the federal government is a grant of par- 
ticular powers. If this power is granted, it is a constructive (i. e., 
implied according to the usage), not an express, power. The near- 
ness or remoteness to the express power should be considered (" its 
incidentality "). This power, if granted, would be incidental to one 
of the three clauses giving power (1) to borrow money; (2) to lay 
and collect taxes to pay the debts, etc.; (3) to pass laws necessary 
and proper, etc. He finds that it is not incident to either of the 
first two. As to the third, no interpretation of that must be given 
which gives Congress unlimited discretion. The meaning of that 
clause should be " limited to means necessary to the end and inci- 
dent to the nature of the specified powers." 

To borrow money is made the end, and the accumulation of 
capital implied as the means; the accumulation of capital is then 
made the end and a bank implied as the means; the bank is then 
the end, and a charter of incorporation, a monopoly, capital pun- 
ishments, etc., implied as the means. If implication, thus remote 
and thus multiplied, can be linked together, a chain may be formed 
that will reach every object of legislation. 

A stricter rule of interpretation is to be found in the constitu- 
tion when powers obviously incidental to other powers are yet 
expressly granted and not left to implication. 

In addition to the arguments of Madison, Jackson, who claimed 
to have first called attention to the unconstitutional nature of the 
bill, urged its probable interference with state banks and its 
monopolistic character. 2 

On the other hand, it was urged 3 that Congress might do what 
was necessary to the end for which the constitution was adopted, 

1 February 2, Annals of Congress, Vol. I, p. 1899. 

a AnndU of Congress, Vol. I, p. 1917. By Ames and Sedgwick, Ibid., p. 1910. 


provided it is not repugnant to the natural right* of mm. or to 
those which they have expressly rosened to themselves, or to the 
powers which they have assigned to the states. Banks are con- 
sidered by most governments indispensably necessary. AM to the 
power to create corporations, this may be derived from the power 
to hold property and make needful rules and regulations for ite 
control. One way of exercising such control would be through the 
agency of a corporation. 

In the cabinet. Summary of the argument of Randolph, 
February 12, 1791: The power to grant charters of incorporation 
is not expressly granted to Congress. If it may be exercised, it ie 
because the nature of the federal government allows it; or because 
it is involved in some of the specified powers of legislation; or 
because it is necessary and proper to carry into execution some of 
the specified powers. (1) To rest the power on the first supposi- 
tion would be to accept a method of interpretation so vague as to 
grasp every power; (2) to rest the power on one of the specified 
powers, under the strict method of interpretation which should be 
followed in a grant of limited powers, requires a close scrutiny of 
the powers to which it might be attached. These are (a) the power 
of taxation, which, when analyzed, shows no need of the granting 
of corporate charters, being composed of the power to ascertain the 
subjects of taxation, the rate of taxation, the mode of collection, 
and to ordain the manner of accounting; (6) the power to borrow 
money, consisting of the power to stipulate the sum lent, the inter- 
est to be paid, and the time and manner of repayment, equally 
fails to show this as requisite; (c) the power to regulate commerce 
is similarly separated into parts and shown to be independent, in 
the view of the attorney-general, of the power to grant charters of 
incorporation; (d) the power to make rules and regulations respect- 
ing the territory or other property belonging to the United State* 
and the preamble to the constitution are not found to show any 
necessity for the exercise of this power. 

The clause "necessary and proper," while it should not be 
treated as restricting the powers of Congress, should not on the 
other hand be held to extend them; it should rather be trotted 
"as among the surplusage which as often proceeds from inattention 
as from caution." ' 

i CLARKE AND HALL. Legitlative and Documentor* Hutorg <f it* ** </tU 
United State* (1832), p. 81 


The argument of Jefferson, then secretary of state, leading to 
the same conclusion took the following form : 

(a) The incorporation of the bank violated various state laws, 
e. g. y the laws of alienage; the laws governing descents; those of 
forfeiture and escheat; the laws of distribution; and those controll- 
ing monopoly. 

(6) The controlling principle of interpretation must be found 
in the statement that "all powers not delegated to the United 
States by the constitution nor prohibited by it to the states are 
reserved to the states or to the people." ' 

(c) The power to grant charters is admittedly not expressly 
granted; it is not implied in power to lay taxes, to borrow money, 
or to regulate commerce; nor is it included in the power granted 
by the words " to provide for the general welfare," which simply 
indicates the purpose for which taxes may be laid; nor in the 
power "to make laws necessary and proper," since "necessary" means 
something other and less than simply "convenient;" i.e., those 
means without which the grant of power would be nugatory. 

The bank not being indispensably necessary, its incorporation 
is beyond the power of Congress. 2 

Hamilton argued as follows: 3 

(a) Every power vested in the government is in its nature 
sovereign, and includes by force of the term a right to employ all 
the means requisite and fairly applicable to the attainment of the 
ends of such power, and which are not precluded by restrictions 
and exceptions specified in the constitution, or not immoral, or not 
contrary to the essential ends of political society. 

In the United States the federal government and the state 
governments are sovereign, each with regard to its proper objects. 

The power to erect corporations is incident to sovereignty, and 
therefore belongs to the United States, in relation to the objects 
intrusted to that government. 

(6) A distinction should be made as to "express powers," 
" implied powers," and " resulting powers," the latter two being 
delegated as fully as the express powers. 

The power to incorporate in the case of conquered territory 

1 Constitution of the United States, Amendment X. 

i Jefferson's Writings, Vol. V, p. 284; see SDMNEE, History of Banking in the 
United States, p. 48. 

s Hamilton's Writings (edited by J. C. Hamilton, New York, 1851) , Vol. IV, p. 104. 


would be a power resulting from the nature of government; the 
power to incorporate to carry into effect a power expressly granted 
is an implied power. In both cases a power to inmiiinu 

(c) The word " necessary" in the constitution dom not 

" indispensably " or " absolutely " necessary; but rather, " needful," 
" useful," " conducive to," etc. The policy of the government has 
already shown this to be the understanding. 

(d) The rule laid down as to liberal interpretation of the stale 
and strict construction by the federal constitution cannot hold, in 
view of the vaster and more complicated interests intrusted to the 

(e) As to the danger of abuse and intrusion Into spheres of 
state activity, it is not to be so much dreaded as the cramping 
effect of the opposite interpretation. 

(/) The criterion of necessity is (1) the end to be accomplished; 
(2) the question, does it abridge the right of any state or indi- 

(fir) The proposed bank will aid in the collection of taxes, by 
increasing the quantity of the circulating medium and quickening 
circulation, and thus increasing the means of payment; and by 
creating a convenient species of medium in which taxes can be 
paid. That is, Congress may name the medium in which taxes may 
be paid, and so may select bills issued under the authority of the 
United States. And as to manner of Issuing such bills, discretion 
may be again exercised, and for this the creation of a bank may 
be selected as the best method. 

Similarly with the regulation of commerce and the war power. 

And, finally, it is within the power to regulate property belong- 
ing to the United States. 

By the Supreme Court in the ccue ofMcCulloch r. The State of 
Mary land (18 19), 4 Wheaton 316. By an act of the Maryland legis- 
lature it was made penal for any bank or branch of a bank doing 
business in the state, without the authority of the state, " to issue 
notes in any manner, of any other denomination than five, ten, 
twenty, fifty, one hundred, five hundred, and one thousand dol- 
lars," and notes of these denominations were to be issued on 
stamped paper, for which they should pay the state tnivmrer cer- 
tain fixed rates or an annual payment in advance of fifteen thousand 
dollars. For a violation of this act the officers were made personal Ij 
and individually liable to the penalty of five hundred dollars each. 


and to recover such a penalty this suit was brought. The decision 
in the state courts was against the officials of the bank, and the 
cause was brought on writ of error to the Supreme Court. 

The substance of the argument of interest here is as follows: 
The constitution derives its force, not from the states, but from the 
people, and creates a government which, though limited in its 
powers, is supreme within its sphere of action. 

The power to create a corporation, though not an expressly 
granted power, may be implied. The great powers of taxation, 
borrowing money, regulating commerce, waging war, and maintain- 
ing armies and navies, being intrusted to the federal government, 
indicate that it is likewise intrusted with ample means for their 

Raising revenues and applying them to national purposes implies 
the power to convey money from one place to another, and of select- 
ing an appropriate method of such conveyance. 

It is true the creation of a corporation appertains to sovereignty; 
but not to one portion of sovereignty rather than another. Since 
the power of sovereignty is in the United States divided between 
the states and the federal government, the means necessary to carry 
these into effect belong to both. Moreover, the constitution has 
expressly granted the power to enact all laws "necessary and 
proper," which is not a cause of limitation, as is shown by its loca- 
tion (" among the powers granted ") and by its purporting to grant 
an additional power. " Let the end be legitimate, let it be within 
the scope of the constitution, and all means which are appropriate, 
which are plainly adapted to that end, which are not prohibited, 
but consist with the letter and spirit of the constitution, are consti- 
tutional." A corporation is such a means, and the act creating the 
corporation of the bank is therefore constitutional. 


Anson, Sir W. It Law and Custom of the Constitution, ad ed. 

Ashley, W. J. An Introduction to English Economic History and 
Theory. The Middle Ages. 3d ed. New York, IMl 

Bancroft, G. A Plea for the Constitution Wounded in the House 
of its Guardians. New York, 1886. 

Barnett-Smith, G. History of the English Parliament, together 
with an Account of the Parliaments of Scotland and Tuliixl 
London, 1892. 

Bolles, A. S. The Financial History of the United State*. New 
York, 1879-86. 

Breckenridge, R. M. A Study of the Demand Notes of 1861. 
Sound Currency, Vol. V, No. 20. 

Branson, H. Connecticut Currency. Papers of New Haven His- 
torical Society, No. 1. 

Bullock, C. J. Essays on the Monetary History of the United 

Carlile, W. W. The Evolution of Modern Money. 1901. 

Cunningham, W. The Growth of English Industry and Com- 
merce during Early and Middle Ages. 3d ed. Cambridge, 

Davis, A. McF. Currency and Banking in the Province of the Massa- 
chusetts Bay. Publications of the American Economic Asso- 
ciation, December, 1900. 

Elliot's Debates in the Several State Conventions on the Adoption 
of the Federal Constitution. 

Felt, J. B. An Historical Account of Massachusetts Currency. 
Boston, 1839. 

Frothingham, R. The Rise of the Republic of the United States. 
6th ed. 

Green, J. R. A History of the English People. New York, 1881. 

Hale, Sir Matthew. The History of the Pleas of the Crown. 1st 
Amer. ed., Philadelphia, 1847. 

Hallam, H. A Constitutional History of England from the Acces- 
sion of Henry VII. to the Death of George II. Sih ed. 



Hare, J. I. C. American Constitutional Law. Boston, 1889. 
Hart, A. B. Salmon Portland Chase. American Statesman Series. 
Hickcox, J. H. A History of the Bills of Credit or paper money 

issued by New York from 1709 to 1789. Albany, 1866. 
Hutchinson, T. The History of Massachusetts from the first settle- 
ment thereof in 1628 until the year 1750. 3d ed. 
James, E. J. The Legal Tender Decisions. Publications of the 

American Economic Association, Vol. III. 
Jefferson's Writings, edited by Paul Leicester Ford. 
Kenyon, R. L Gold Coins of England. London, 1884. 
Knox, J. J. A History of Banking in the United States. New 

York, 1900. 

Knox, J. J. United States Notes. New York, 1885. 
Laughlin, J. L. The History of Bimetallism in the United States. 

4th ed. 
Libby, O G. The Geographical Distribution of the Vote on the 

Federal Constitution. 
Liverpool, Charles, 1st Earl of. A Treatise on the Coins of the 

Realm; in a Letter to the King. London, 1880. 
Madox, T. The History and Antiquities of the Exchequer of the 

Kings of England. 2d ed. London, 1769. 
Mommsen, T. History of Rome. Translated by W. P. Dickson. 

New York: Scribner, 1895. 
Phillips, H. Historical Sketches of the Currency of the American 

Colonies prior to the adoption of the federal constitution. 
Pollock and Maitland. History of the English Law before the 

Time of Edward I. Cambridge, 1895. 
Potter, E. Some account of the bills of credit or paper money of 

Rhode Island from the first issue in 1710 to the final issue in 

1786. Rhode Island Historical Tracts, No. 8. 
Ripley, W. Z. Financial History of Virginia, 1609-1776. 
Ruding, R. Annals of the Coinage of Britain and its dependencies 

from the earliest period of authentic history. London, 1817. 
Schuckers, J. W. The Life and Public Services of Salmon Portland 

Chase. New York, 1874. 
Spaulding, E. G. History of Legal Tender Paper Money. Buffalo, 

Story, J. Commentaries on the Constitution of the United States. 

5th ed. Boston, 1891. 
Stubbs, W. Constitutional History of England in its Origin and 

Development. 5th ed. Oxford, 1891. 


Stubbs, W. Select Charters and Other I Hunt ration* of EntfUnh Con- 
stitutional History from the Earliest Tune* to At Reign of 
Edward I. 8th ed. Oxford, 1890. 

Sumner, W. O. The Financt* and the Financier of the Revolution. 
New York, 1892. 

Sumner, W. G. A History of Banking in the United State. 

Taswell-Langmead, T. P. English Constitutional Hiitory from the 
Teutonic Conquest to the Present Time. 4th ed. ' -***%% 

Thayer, J. B. Legal Tender. Harvard tow Review, Vol. I. 

Tucker, J. R. The Constitution of the United States. Chicago, 

United States Treasury Circular No. 123. Information nwpecting 
United States bonds, paper currency, etc. July 1, 1898. 

Webster. The Works of Daniel Webster. Boston, 1851. 

Weedon, W. B. Economic and Social History of New England, 
1620-1789. Boston, 1891. 
General reference is also made to public documents; for 

example, Statutes at Large, Revised Statutes, journals of legiola- 

tive bodies, and court reports which have been available and found 

to be of service. The citations in the notes will prove an adequate 

guide in making use of these authorities. 

I\M -. 




ASSEMBLY (1775). 7. 
ACTS or PARLIAMENT: applications to 

the colonies, 51. 




CotMAOB POWER: abas* of. 

BANCROFT .GKOROR: interpretatio 

bat* in Couslitutional Convention, 83. 
BANK or THE UNITED STATE*, incorpo- 

rated 1791, 138; incorporated 1816,130. 
BAN KB : chartered by state authority, 111. 
BARONS : early legislative assembly, 5, 10. 
BARB MONET: used in Ireland, 18. 
BENTON, THOMAS HART: proposes in 

Senate a tax on state- bank issues, 150. 
BILLS or CREDIT: continental, 87: de- 

fined by the Supreme Court. 106; is- 

sued by states after Revolution, 69; 

of Massachusetts before Revolution, 

56: of New York and Pennsylvania, 59; 

parliamentary control over, 60; under 

the constitution, 106. 


BLACK MONET : Turney, 31. 


or KENTUCKY, 106, 143. 
BRONAON vs. RODES: specie contract*, 

BULLION : inadequate amounts brought 

to mint, 31. 


CASH TRANSACTIONS: executed con- 

tracts, 16. 
CHASE. SALMON P.: assumes treasury 

portfolio, 112; propones issue of treas- 

ury notes, 112; proposes national baiik- 

inff system, 139 ; consents to focal-tender 

notes, 116. 
CIRCULATING MEDIUM : efforts to obtain 

and maintain, 29. 
COBB, H.: secretary of treasury (1857). 


OOMMBI M : 9m M I 
Con MOW COUNCIL: early 

body, 5. 
COMMONS: transfer ol B 

COHtll 1 1 ilOXALITT or TMB LB0AL> 

TENDER ACT: doniMl. 127: alrsd to 
time of war. 130; affirmed to USM of 

i- ! : | 



CONTINENTAL BILLS: toadrr pow*r be- 
stowed and withdrawn by UM latssvI. 


CONTRACT, LAW or, 22. 


COPPER cons. 7X 

fffrr^T*-* lesHslatiwi body. 5. 


CRAIG vs. MISSOCBI. M8, 142. 

COIN AGR, 44. 

CRISIS or 1857. 109. 

CROWN : aarraadtasBMBA of. ft Ba4sr 
the Tudor., P; relatiuo to ParUasBSSJt, 

CURIA REGIS : lacislativ* body. 1 

CURRENCY: "current" BMBB!B of. ML 

DBBASBMWTT: proppasd(U47).z of sO> 

vercoin. first (1299). : of sUvarsote. 

Meood. 33; by set of_ ParlissjMwl. : 

ET(lni. 43; 

sons for, 84 ; ui 
DEBATE: in Constitutional 

W ff. ; oa U*l-**od.r bill I 

K'-i-rn^ntAtivM, 117; oo 

billin Senate. 118. 
DEBT: action of. 2. 



DON rs. WILLOW*, or DUso* M. WO- 




EDWAED I. (1272-1807), 6, 30, 31. 

EDWAKD II. (1307-26/7), 30. 

EDWAKD III. (1326/7-77), 6,10,19,27,31,36, 


EDWAED VI. (1546/7-53), 24, 48. 

ELIZABETH (1558-1602/3), 7, 8, 13, 43. 
ELLSWOETH, OLTVEE (Connecticut), 77. 

PENNY, 28. 

EXECUTED CONTEACTS: cash transac- 
tions, 16. 

tions, 16, 21. 



FIELD (JUSTICE), 132, 135. 

FOBEIGNCOIN: inferior to English, 30; 
in the colonies, 54; legitimized, 14; 
regulated by Congress, 89 ; dispensed 
with, 90. 

FOUAGE, Moneyage, 9. 

FB ACTION AL CURRENCY: legal-tender 
notes, 121. 

FBACTIONAL SILVEE : driven out by legal- 
tender notes, 121. 


GEOBGIA : issues bills after Revolution, 

GERRY, ELBBIDGE (Massachusetts) : in 
Constitutional Convention, 75. 

GOLD: medium in large payments in 
United States, 96; certificates, 123; 
coin a tender in the colonies, 64 ; pen- 
nies (1257), 18; introduced into English 
coinage, 33. 

GORHAM, BENJAMIN: member of Con- 
gress, Massachusetts, 94. 

GORHAM, NATHANIEL: member of Con- 
stitutional Convention, 77, 79, 82. 

GUINEA : reduced in value, 45. 



TENDEE (1814), 104. 
HAMILTON, ALEXANDER, 79, 84, 88, 101. 


HENRY I. (1100-1135), 6, 22. 
HENRY II. (1154-89), 6, 9, 28. 
HENRY III. (1216-72), 18, 27. 
HENRY VII. (1485-1509), 13, 27, 28, 37, 39. 
HENRY VIII. (1509-46/7), 13, 21, 39, 42, 48, 


TION OF 1834, 92. 

INDENTURE : mode of exercise of coinage 
power, 14. 


obtain, 31. 


JACKSON, ANDBEW : orders Treasury cir- 
cular, 150. 

JAMES II. (1684-88), 20, n. 4. 

KENTUCKY : attempts to evade constitu- 
tional prohibition, 142 ; Commonwealth 
Bank notes not "bills of credit," 143. 

KING, RUFUS (Massachusetts), 79. 

KNOX vs. LEE : Legal-Tender Cases, 92. 


LANGDON, JOHN (New Hampshire), 78. 

LAW OF CONTRACT: developed finally 
only in sixteenth century, 22. 

LEGAL TENDEB: legislation (1774-1816, 
English), 45; notes of Civil War, pro- 
posed, 115; bill passes House of Rep- 
resentatives, 118; bill becomes a law, 
119; notes, second issue, 121; notes, 
third issue, 122 ; notes and state obliga- 
tions, 125 ; notes bearing interest issued, 
122; notes declared unconstitutional, 
127 ; notes declared constitutional, 130, 

LEGISLATIVE BODY : Barons, 5 ; Common 
Council, 7 ; Council, 5 ; Curia, 5 ; Great 
Council, 5. 


LOAN: of 1812, 102; of 1843, 107; of 1860, 

LORDS OF TRADE, etc., 49. 

MADISON, JAMES, 76, 77. 


UNITED STATES (1834), 91. 
MASON, GEORGE (Virginia), 77. 
MASSACHUSETTS: makes bills of other 

colonies a tender, 67 ; organizes mint, 



MERCER, JOHN F. (Maryland), 77. 

MINT: established in Massachusetts, 55: 
federal, provided for by Congress of 
Confederation, 73; federal, went into 
operation (1794) , 90. 

MISSOURI: attempts to evade consti- 
tutional prohibition, 142; notes de- 
clared bills of credit, 142. 

MIXT MONIES: Brett's Case of , 24, 132, 

MONEYAGE, lefottage, 9. 



I SI-! \ 

if ORRtft. OOUVKRNBTJR, 76. 77. C. 



ended, l; created, I MX 
NBW JBMBT : issues bill, of eredlt after 

Re volution, 09. 
NBW YOBB : i**ues bills of credit after 

Revolution, OH. 
NOBLE, 19, 33. 
NORTH CAROLINA : i*ne bill* of eredlt 

after Revolution, ; ratifjrin* eon- 

\.-utiou of. MX 
NOTES: of Bank of United States, 139; 

of national bank*, 140. 

PARLIAMENT: change* in relation* to 
Crown (1695), 13; consulted on matters 
affecting coinage. 10; coiutitulion, 
procedure, and rights of, 6, 7. 


PATTBBSOM, WILLIAM (New Jersey), 75. 


PENNSYLVANIA: issues bills of credit 
after Re volution, 69. 

PENNY: eaterling, 28 ; fine cold, 18; sil- 
ver, 18. 


POLICE POWER : invoked to enforce ten- 
der law, 20. 

POUND, tower or Saxon, and Troy, 27. 

Pooo v*. DB LINDBEY, 24. 

PROCLAMATION: mode of exercise of 
coinage power, 14. 



RANDOLPH, EDMUND (Virginia), 74, 77. 
READ, GEORGE (Delaware), 78. 

STATES. 91. 

II., 28; under Edward VI., 41. 



-, . 


SILVER: dollar*, 

Bocra CAROLINA. 89, U. 



STANDARD or COIMAOB: oriia*l. T; la 

STATB BANKS: iama* taxed. Its. 
BTBONO (JcsricB), tsx 

Mllll ! rOB M< > ET IN TVS COU> 
BIBB, 52. 


TAXATION: nat tonal Isatioai of.C 
TENDER: plea of, X. 


TOKEN cons, 39. 



TREASURY NOTE*, of 1K1S-C. MK; of 101, 

\>f>: propuMl to make a leader (Ut4). 



VIRGINIA : ratifyinc eonveaUoa, la 


WEBSTER. DANIEL. 144, liv 
WILLIAM I. (loa*-lloo).&.9,2m. 
WILLIAM III. (MM-ITOI). 11, 44. 
WILSON. JAMBB (PMmqrlvaaia). m 



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